Can A Usury Savings Clause Save The Lender?

Usury savings clauses are commonly found in loan agreements. These clauses attempt to negate the effect of interest payable under a financing arrangement that may result in the imposition of usurious charges. The usury savings clause basically recharacterizes as principal interest payments made by a borrower, should such payments exceed the permissible rate set by state law. Lenders often assume that the use of such a clause "saves" the lender from liability arising from the imposition of interest charges ultimately determined to exceed the maximum allowed under applicable law. However, courts have varied in their interpretation of the validity and enforceability of the usury savings clauses, with many unwilling to uphold them.