How high can interest on personal loan be?

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How high can interest on personal loan be?

I took out a loan from this institution last June and payments started in July at $115/month. The loan was for $1000. I then borrowed another $130 in December which brought my payments up to $145/month. I’ve paid them $1445 so far and they informed me I still have $1300 left to pay. This is $2745 on a $1130 loan. Is it legal to have an interest rate of more than 100%?

Asked on July 26, 2011 Mississippi

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

In most states the legal rate of interest for a loan that is not brokered by a licensed real estate broker and secured by real property, or is a charge on a credit card, is prime plus 5% existing at the time the loan was made.

Look under your state's Constitutional Code under "usury laws "to find your answer. I agree, it seems that the charge on the $1,000 loan is excessive. If the interest rate is usurious under state law, then perhaps you would not be responsible for any interest.You essentially get an interest free loan.

If your local bar association has a program to assist the public with issues like yours, you should contact it.

Have you considered asking the institution that gave you the loan for the authority it has for charging you such high interest rates? It would be interesting to see if such information would be provided to you.

Yiu are onto a possible problem with the lender's charges to you. Good luck.


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