Are Bail Bondsmen Allowed to Charge Interest?

Are Bail Bondsmen Allowed to Charge Interest?

When someone is arrested and needs to post bail to get out of jail while awaiting trial, they often turn to a bail bondsman. Bail bondsmen will post the full bail amount on the defendant’s behalf in exchange for a percentage fee. But can bail bondsmen also charge interest on top of their fee? The answer is – it depends on the state.

Bail bonds are regulated at the state level, so the laws regarding fees and interest vary widely across the U.S. Some states have very strict regulations prohibiting bail bondsmen from charging any interest at all. Other states allow bail bondsmen to charge interest within certain limits. And in some states, bail bond interest rates are unregulated.

States Where Bail Bond Interest is Illegal

There are a handful of states that prohibit bail bondsmen from charging any interest whatsoever on bail bonds. These include:

• Oregon – Bail bondsmen are limited to charging a 10% fee only, no interest allowed[1]
• Wisconsin – Bail bond fees are capped at 10%, interest is illegal[2]
• Illinois – Bail bond fees limited to 10%, interest prohibited[3]

In these states, bail bondsmen are only allowed to charge their set fee percentage – such as 10% of the total bail amount. They cannot impose additional interest charges on top of that fee, even if the fee is paid in installments over time.

States With Interest Rate Caps

Some states allow bail bondsmen to charge interest, but cap the maximum interest rate they can impose. For example:

• California – Interest capped at 10% [4]
• Texas – Max interest of 10% per year[5]
• Arizona – Can charge interest up to 15%

So in these states, bail bondsmen can charge their standard bail bond fee percentage, such as 10-15% of the total bail amount. And they’re also allowed to charge interest on top of that, but the interest rate is capped by law, usually between 10-15%.

States With No Interest Rate Cap

There are also some states that allow bail bondsmen to charge interest, but don’t impose a maximum limit on the interest rate. These include:

• Florida – No cap on interest rates
• Georgia – No limit on interest charges
• Nevada – No maximum interest rate

In these states, bail bondsmen are free to set their own interest rates and fees. They can charge whatever interest rate they want, with no cap. Of course, high interest rates may deter customers, so there are still market forces at play. But legally bail bondsmen have a lot of leeway on interest in these states.

The Majority of States Allow Interest Within Limits

While the above categories cover some of the outliers, the majority of U.S. states do allow bail bondsmen to charge interest, as long as it falls within certain limits. For example, some common state laws include:

• Alabama – Interest rates capped at 25%
• Indiana – Interest limited to 10% per year
• Kansas – Interest rates not to exceed 15%
• New York – Interest capped at 25% per year

So in most states, bail bondsmen are permitted to charge a 10-15% fee as well as impose additional interest charges in the range of 10-25% per year. As long as the interest rates fall within the caps set by each state, the practice is legal.

Why Do States Allow Bail Bond Interest?

States that permit bail bond interest argue that it serves a purpose. For one, it compensates bondsmen for the risk and cost of financing bail. The interest helps offset losses when defendants breach their bail bond agreements.

Interest also allows customers to pay over time in installments. Rather than requiring the full 10-15% fee upfront, bondsmen can spread payments out, for a fee. This expands options for defendants who can’t afford to pay the full bail bondsman fee at once.

However, consumer advocates argue that bail bond interest exploits vulnerable defendants. And in states with no interest rate caps, rates can climb exorbitantly high. There are often calls for reform and more consumer protections in these states.

Shop Around and Negotiate

The takeaway is that bail bond interest and fees can vary widely between states. There is no universal standard.

If you need to post bail in a state that allows interest, it pays to shop around and negotiate. Many bail bondsmen are open to negotiating their fees and interest rates. Seek quotes from multiple companies and compare both the upfront fee percentage and the interest rate they want to charge. Often you can get the interest rate lowered by agreeing to pay a higher initial fee percentage.

Also be sure to get full disclosure on any additional fees the bondsman may impose. There are sometimes processing fees, co-signer fees, installment fees and more. Read the full bail bond contract carefully so you understand the total costs.

With smart shopping and negotiation, you can often reduce your bail bond expenses. But be aware – in states with no interest rate regulation, bail bondsmen have a lot of leeway to impose high fees and interest.

The Debate Over Bail Bond Interest Continues

Consumer advocates argue the bail bond system exploits defendants who haven’t been convicted of any crime yet. And the practice of imposing unregulated interest rates just makes it worse.

There are increasing calls around the country for bail reform. Some states and jurisdictions are considering eliminating cash bail entirely. Others are imposing regulations to cap bail bond interest rates. Reformers want to reduce the financial burdens on defendants awaiting trial.

But the bail bond industry argues that reforms would put bail bondsmen out of business. They say reasonable fees and interest are necessary to offset the substantial risks bondsmen take on. Industry groups continue to lobby lawmakers to protect bail bondsmen’s ability to charge interest and fees.

The debate over the fairness and regulation of bail bond fees and interest continues. And the laws keep evolving state-by-state. But for now, in most states, bail bondsmen still have the legal right to charge interest within certain limits.

The Bottom Line

It’s important to understand your state’s laws regarding bail bond fees and interest. While some states prohibit interest, most allow it within regulated limits. Be prepared to shop around and negotiate to get the lowest bail bond costs. And continue to watch for reforms that may change the laws in your state.

References

[1] https://www.oregonlaws.org/ors/705.245

[2] https://wicourts.gov/sc/rulhear/DisplayDocument.pdf?content=pdf&seqNo=260868

[3] http://www.ilga.gov/commission/jcar/admincode/050/050010sections.html

[4] https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=1822.51.&lawCode=INS

[5] https://statutes.capitol.texas.gov/Docs/OC/htm/OC.1704.htm

https://www.azleg.gov/ars/20/00480.htm

http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0600-0699/0690/Sections/0690.03.html

https://law.justia.com/codes/georgia/2010/title-44/chapter-13/article-2/44-13-15

https://www.leg.state.nv.us/NRS/NRS-697.html#NRS697Sec280

https://law.justia.com/codes/alabama/2006/14214/15-13-103.html

https://www.in.gov/legislative/ic/2010/title27/ar10/ch1.html

https://www.ksrevisor.org/statutes/chapters/ch22/022_009_0034.html

https://www.nysenate.gov/legislation/laws/ISC/6810