Legal Question in Credit and Debt Law in California

Limit to interest charged

Is there a limit to the percentage of interest a person can charge on a personal loan? For instance if I was to boworrow say $5000 from a person (not a lending institution) just someone I knew who was willing to loan the money and we agreed that the money were to be paid back in two or three weeks of $10,000 thats 5000 for the loan and 5000 interest is that legal? And then charge $250 per day in interest for any unpaid balance not paid in full of the $10,000 after 21 days. Would this not be considered rackatering or loan sharking. Is there not a limit to how high of an interest privite citizens can charge on personal loans between one another? Thank you for your time.


Asked on 3/19/04, 3:53 am

1 Answer from Attorneys
Larry Rothman Larry Rothman & Associates

Re: Limit to interest charged

A unlicensed, unauthorized by law person can only charge 10 %. There are exceptions. i.e. real estate broker, homeowners association, liquor distributor. Please call us. If any usuarious interest is paid, a lawsuit can be filed for its recover plus penalty.

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Answered on 3/19/04, 9:45 am


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