Can interest of 363.85% be charged on a loan promissory or security agreement?

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Can interest of 363.85% be charged on a loan promissory or security agreement?

A title loan of $689 was taken on my car; the interest rate of 363.85% make it a total payment of $2150.06. If bankruptcy is filed, does this title loan company just take the car back and loan is considered paid in full? Or, can they still collect the balance due of interest and late fees?

Asked on April 22, 2012 under Bankruptcy Law, Pennsylvania

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

The interest rate of 363.85% that you have written about seems as though it would be in violation all all states' laws on usury in this country and as such, the rate is excessive and illegal.

If you file for bankruptcy protection, the lender on the car loan could repossess the car after the automatic stay as to all proceedings regarding the bankruptcy is lifted. If your bankruptcy is approved and you get a discharge, you would owe nothing further on the vehicle other than amounts actually paid to the lender.


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