What is the highest interest rate a finance company can charge on a used car loan?
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What is the highest interest rate a finance company can charge on a used car loan?
Asked on July 16, 2010 under General Practice, Illinois
Answers:
M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
States generally have a statute that states what the maximum amount in interest may be charged. They are called "usury" statutes or usury limits. However, these laws may not necessarily apply to Banks or installment plan sellers (like car financing companies) because of a law that the Federal Government passed a while back allowing them to ignore state usury limits and pegged the rate of interest at a certain number of points above the federal reserve discount rate. In Illinois the legal rate of interest is 5%. The general usury limit is 9%. The judgment rate is 9%. Check with your state Attorney General's Office or your state banking commission to be sure.
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