Is it legal for an individual to give a personal loan with 24% non-compounded interest in state of California?
†?!?K †??K² asked:
My employer asked me to give her a loan. She said she will pay 2% of the total borrowed amount per month and at the end of the year, return the original borrowed amount. I figured this is 24% APR interest rate. Is this legal for me to do?
She said she would sign a promissory note.
Thanks to those that has given me an advice already. I am re-asking to get some more professional opinions.
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My employer asked me to give her a loan. She said she will pay 2% of the total borrowed amount per month and at the end of the year, return the original borrowed amount. I figured this is 24% APR interest rate. Is this legal for me to do?
She said she would sign a promissory note.
Thanks to those that has given me an advice already. I am re-asking to get some more professional opinions.
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April 21st, 2009 at 10:51 pm
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You will never get your money.
This person is not offering you anything in writing upfront.
If this person has such bad credit, they probably have a horrible credit score.
That means that this person has a lot of debt that have not been paid off.
AND - creditors can send you to collections and court.
Don’t do it - if you ever want to see your money again.
Tell that person you can’t and send them to a bank.
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April 22nd, 2009 at 6:12 pm
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Probably not. In California, Usury is defined as interest over 10% for personal purposes, if you are not within an exemption (i.e., have a bank charter or the account is revolving trade credit, etc.). I would not make that loan if I were you, because you could not enforce it if you have to. Also, you should think twice about your employer asking you for a loan…