California Supreme Court Ruling – Personal Loans and Unconscionable Interest Rates

On August 13^th, 2018 in the case of De La Torre et al. v. Cashcall, Inc., the California Supreme Court ruled that some interest rates may be so high, they are illegal, despite there being no clearly defined cap. A group of borrowers, who took out loans from Cash Call in amounts greater than $2,500.00, were all given interest rates greater than 90% and some as high as 135%. Currently, the cap on interest rates for loans under $2,500.00 is defined between 20 and 30%. However, the court did not clearly define what cap would become unconscionable, and stated that doing so would be a daunting task.

Associate Justice Mariano Floertino-Cuellar stated “courts have a responsibility to guard against consumer loan provisions with unduly oppressive terms.” He also stated that a lack of a cap does not mean that the courts are required to allow any interest rate.

According to a representative at Cash Call they have ended their practice of consumer-lending, in the form of personal loans in July of 2018, and have removed their personal loan application from their website.

High interest personal loans and pay-day advance loans can easily create a trap for overwhelming debt. If you have questions about how to break the cycle, please reach out to your Modesto Bankruptcy Attorney.