California Supreme Court Revives The Concept Of Usury

By on August 15, 2018

August 15, 2018

Lending law in California sets no cap on interest rates on loans over $2500, and the theory that rates might be  unconscionable or exorbitant has mostly disappeared since the advent of payday loans, but in an opinion released Aug. 13, the California Supreme Court said courts “have a responsibility to guard against consumer loan provisions with unduly oppressive terms,” including interest rates. CashCall, a company based in Orange County, offers consumer loans at interest rates of more than 100 percent. A class of CashCall borrowers sued the company in 2008 in federal court over loan rates and other terms that they argued made the loans “unconscionable.” Cashcall’s attorneys argued that the Legislature intended to allow lenders to set their own rates without interference from state regulators. The case is before the U.S. 9th Circuit Court of Appeals, which asked the state’s high court to opine whether a high interest rate alone could be unconscionable, thus voiding a loan. An attorney who represents the borrowers said he expects a trial to be held next year.
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The Los Angeles Times

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