California Usury Law
In considering personal, consumer loans in the State of California, the general legal, usury interest rate attached to these loans is 10%. The usury limitation that has been established for non-consumer loans in California is 5% greater that the interest rate duly established by the Federal Reserve Bank of San Francisco. California is the only state in the nation that currently connects its usury loan limitation for non-consumer loans to a specific Federal Reserve Bank. Normally, if it is to be tied to a Federal interest rate, it is the more generalized Federal Prime Rate.
Law governing usury in California are governed by statutory provisions that are found generally in ten different sections of the California Code:
1. CALIFORNIA CIVIL CODE SECTION 1917.610-1917.619
2. CALIFORNIA CORPORATIONS CODE SECTION 25110-25118
3. CALIFORNIA CIVIL CODE SECTION 1917.060-1917.069
4. CALIFORNIA CIVIL CODE SECTION 1917.160-1917.168
5. CALIFORNIA CORPORATIONS CODE SECTION 25110-25117
6. CALIFORNIA CIVIL CODE SECTION 1917-1917.006
7. CALIFORNIA FINANCIAL CODE SECTION 22050-22064
8. CALIFORNIA GOVERNMENT CODE SECTION 5900-5909
9. CALIFORNIA COMMERCIAL CODE SECTION 9201-9208
10. CALIFORNIA FINANCIAL CODE SECTION 22050-22062
With this noted, it is important to understand that different statutes in California govern personal consumer loans as well as commercial non-consumer loans. Further distinctions are made between personal consumer loans that are made from one individual to another and those that are effected by state charted banks, savings and loans and other types of lenders. Moreover, the usury rate limitation for consumer loans addressed in this article is inapplicable when a purchase of goods is considered. The purchase of such goods as automobiles is governed by the Uniform Commercial Code and is subjected to the interest rate scheme that has been established therein.
Generally speaking, courts in California will strike down as illegal and unenforceable in its entirety any loan agreement that calls for an interest rate to be paid above and beyond that which explicitly is permitted by the laws and regulations of the state.
All this being said, if you feel you're a victim of usury you should seek professional legal council from a California board certified attorney, because the California usury law is quite complicated. While it's probably obvious that California law does not protect you from usurious interest rates on your credit card, there are actually many instances where california law will not protect you from predatory rates. For example, a non-personal loan is not protected, and you may not be protected on loans from pawn shops and credit unions. Because of this complexity, please consult a lawyer certified to practice in California.
Of course, the laws in California regarding usury, lending practices and lenders are continually in a state of flux. While we make every effort to keep the information that we are providing to you up to date and accurate, if you’ve any specific questions about usury laws in California, you should consult an attorney or review the most current edition of the California Code, as amended. Additionally, we are not attempting to provide you with legal advice in this article. If you do have any other types of questions regarding usury laws in California, you would be well advised seeking professional legal assistance.