What is the maximum interest rate a financial institution can charge?

[bamagirl]

A friend of mine was trying to get a $5,000 loan to consolidate bills. She doesn't have the best credit due to having these bills, but she pays more than the minimum and is never late. She contacted one particular financial place and her payments were going to be $350 for 36 months. I did the math and she would be paying almost $13,000 back! I put this into a loan calculator and found she would be paying 75% per year!!! Is this even legal? (I realize she shouldn't have gotten herself into this much debt to start with, but still, this is ridiculous.) Is there a limit to how much they can charge!

 

[efflandt]

Most states no longer have any usury limits for consumer loans. So it is whatever you agree to.

 

[CatDad]

As long as the financial institution is incorporated in Delaware or S. Dakota (as 99% of them are), then there is no limit to how high the interest rate can be....basically, the limit is whatever they can get away with.