Is it legal for a collection agency to charge a 6% daily interest rate?
Question Details:
I have been paying on bill for a year and a half and called because it had only gone down $30.That's when the representative told me my principal is going down but because of the interest rate of 6% daily my balance was still over $3,000. She said we could negotiate the interest once the principal was paid off.
If Virginia law applies, Virginia has a complicated set of usury laws which set the maximum rate of interest that may be charged. Lenders have attempted to avoid the Virginia cap on interest rate by alleging that the loan originated from a foreign nation or a native american sovereign nation.
If your loan is from a Virginia lender to a Virginia resident, the maximum rate of interest for a personal loan is 12% per year. It states in § 6.2-303. Except as otherwise permitted by law, no contract shall be made for the payment of interest on a loan at a rate that exceeds 12 percent per year. There is an exception for pay day loans. The Virginia Code states in § 6.2-1817 A licensee may charge and receive on each loan interest at a simple annual rate not to exceed 36 percent.
Busniess loans are governed by another set of laws.
