What is considered to be a legal interest rate?
Question Details: My girlfriend "bought" some furniture from a rental center last year for $1400. After paying $169 a month for 16 months, she called and was shocked to find out she owes 16 more payments of $169. The pay off amount today is over a $1000. I calculated the interest rate to be almost 12% a month, almost 140% APR a year. How can this be legal?
The definition of usury, or unfair interest rates, is defined by state law. Some titke companies charge as much as 350% interest rates. The important thing to consider is whether the rate was fully disclosed at the time of the origination of the loan. If yes, no foul. If no, there may have been a violation of a federal fair debt and/or loan law. I would advise you to take the original documents to an experienced consumer credit attorney for evaluation.
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