Ark. Code Ann. § 4-57-101 (2026)
Calculation of interest — Definition
- Whenever in any statute, deed, written or verbal contract, or in any public or private instrument whatever, any certain interest is or may be mentioned, and no period of time is stated for the rate of interest to be calculated, interest shall be calculated at the rate mentioned by the year, in the same manner as if the words “per annum” or “by the year” had been added to the rate.
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- For the purpose of calculating interest, a month shall be considered the twelfth part of a year, and as consisting of thirty (30) days.
- Interest for any number of days less than a month shall be estimated by the proportion which the number of days shall bear to thirty (30).
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- In calculating interest for a partial payment that is made on a consumer loan, the interest shall be calculated to the time when the partial payment was made, and the partial payment shall first be applied to the payment of the interest.
- If the partial payment exceeds the interest due on a consumer loan, the balance of the partial payment shall be applied to reduce the principal of the debt.
- The method for calculating interest and applying payments under subdivision (c)(1)(A) of this section shall apply to all subsequent payments.
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- Interest shall not be added to the principal balance of a consumer loan if a payment falls short of paying the interest due.
- Subdivisions (c)(1) and (2) of this section do not apply to commercial credit, including without limitation commercial real estate financing transactions.
- As used in this subsection, “consumer loan” means an extension of credit for personal, family, or household purposes but does not include credit card debt, open account debt, or installment loans.
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- The rate of interest under a contract in which a rate of interest is not specified is six percent (6%) per annum.
History. Rev. Stat., ch. 80, §§ 10-12; C. & M. Dig., §§ 7357-7359; Pope's Dig., §§ 9396-9398; A.S.A. 1947, §§ 68-605 — 68-607; Acts 2013, No. 1214, § 1; 2013, No. 1223, § 1.
Amendments. The 2013 amendment by No. 1214 rewrote subsection (c).
The 2013 amendment by No. 1223 added subsection (d).
Research References
U. Ark. Little Rock L.J.
Note: Cagle v. Boyle Mortgage Co., 1 U. Ark. Little Rock L.J. 86.
Case Notes
Applicability.
This section does not apply to payments made on advancements in a “building and loan” company contract. Reeve v. Ladies Bldg. Ass'n, 56 Ark. 335, 19 S.W. 917 (1892).
Court applied six percent rate of prejudgment interest to a contract that was silent about the interest rate for unpaid indemnity obligations because, in part, the General Assembly's restoration of the 6% rate through this statute reflected Arkansas's public policy on this question. Mo. & N. Ark. R.R. v. Entergy Ark., Inc., No. 1:10-cv-8-DPM, 2013 U.S. Dist. LEXIS 139204 (E.D. Ark. Sept. 27, 2013).
Compound Interest.
This section does not prevent probate courts from compounding interest in cases of abuse of trust by fiduciaries. Price v. Peterson, 38 Ark. 494 (1882).
Where act providing for settlement of indebtedness between counties provided that indebtedness should “bear interest at 5 per cent per annum from date till paid,” if the interest was not paid annually, the installments of interest would not bear interest. State ex rel. Chicot County v. Desha County, 82 Ark. 360, 99 S.W. 1108 (1907).
Where note provided “if interest be not paid annually, to become as principal and bear the same rate of interest” it was clear that it was intention of parties that interest mature annually instead of at maturity of note. McNeil v. Harris, 188 Ark. 706, 67 S.W.2d 602 (1934).
Payments.
Under partial payment rule, fact that money was received by borrower on ninth day of month did not make agreement usurious. Matthews v. Georgia State Sav. Ass'n, 132 Ark. 219, 200 S.W. 130 (1918).
Where monthly payments exceed interest on purchase money for a month the payments must be credited as provided in this section. Rose v. Howell, 171 Ark. 529, 284 S.W. 776 (1926).
Usury.
Contract for loan repayable in monthly installments was not usurious as interest would not be in excess of maximum legal rate. Lyttle v. Mathews Inv. Co., 193 Ark. 849, 103 S.W.2d 47 (1937).
In class action suit against lender for violating usury laws where lender argued that the arbitration clause in its deferred presentment agreement was not a separate agreement, but rather simply part of the whole agreement, and that mutuality had to be analyzed as to the whole agreement, the Supreme Court held that mutuality within the arbitration agreement itself was required. The Money Place, LLC v. Barnes, 349 Ark. 411, 78 S.W.3d 714 (2002).
Cited: Gunther v. Cotner, 192 Ark. 498, 92 S.W.2d 865 (1936); Hoobler v. Holder, 239 Ark. 5, 386 S.W.2d 699 (1965); Davidson v. Commercial Credit Equip. Corp., 255 Ark. 127, 499 S.W.2d 68 (1973); Martin v. Moore, 269 Ark. 375, 601 S.W.2d 838 (1980); Svestka v. First Nat'l Bank, 269 Ark. 237, 602 S.W.2d 604 (1980); Ford Motor Credit Co. v. Hutcherson, 277 Ark. 102, 640 S.W.2d 96 (1982).