personal loan

[angeline]

What is the name of your state? california
i have lend money to a person not really a friend for the amount of $2700 and i asked him for a collateral. we agreed on everything including paying an interest of 5% just for a month. he paid me $1900 for the first month and still owes me $800. he wants his collateral back and i didn't want to give it until he's not paid in full. he was threatening me that he would report me to the police if i don't give it back to him. he was saying that i'm doing a loan shark. first of all i'm not doing this for a living he just ask me if can do him a very big favor because he really need the money so i told him i can cash out from my credit card and just give me collateral just in case you won't be able to pay me and he agreed on it . please help me. i don't know what to do. thanks!

 

[HomeGuru]

What is the name of your state? california
i have lend money to a person not really a friend for the amount of $2700 and i asked him for a collateral. we agreed on everything including paying an interest of 5% just for a month. he paid me $1900 for the first month and still owes me $800. he wants his collateral back and i didn't want to give it until he's not paid in full. he was threatening me that he would report me to the police if i don't give it back to him. he was saying that i'm doing a loan shark. first of all i'm not doing this for a living he just ask me if can do him a very big favor because he really need the money so i told him i can cash out from my credit card and just give me collateral just in case you won't be able to pay me and he agreed on it . please help me. i don't know what to do. thanks!

**A: what is the collateral and is there any agreement in writing as to the loan and you holding the collateral if you do not hold title.

 

[angeline]

it's a 24kt gold necklace 105grams. the only thing that i have in writing are his post dated checks as a payment for the loan.

 

[HomeGuru]

it's a 24kt gold necklace 105grams. the only thing that i have in writing are his post dated checks as a payment for the loan.

**A: what is the market value for the piece if sold to a jeweler?

 

[JETX]

"i have lend money to a person not really a friend for the amount of $2700 and i asked him for a collateral. we agreed on everything including paying an interest of 5% just for a month."
*** Charging 5% per month comes to an annualized interest rate of almost 80% per year!!
The maximum allowed interest per year by California Constitution (Article XV, Section 1) is 10% for consumers; the general usury limit for non-consumers is more than 5% greater than the Federal Reserve Bank of San Francisco's rate.
Source: http://www.leginfo.ca.gov/.const/.article_15

As such, your loan is in violation and would likely be found unenforcable by a court.

 

[angeline]

i'm only doing this for one month. i'm charging him 5% is because i was charge 3% cash advance fee from my credit card and that's why i have to let him pay for it plus 2% for the hassle of me doing this whole thing for him. i don't even want to do it but he was just begging me to lend him money.

 

[JETX]

It doesn't matter if it is for one month or thirty. Five percent interest per month is usury as noted in my post. All interest (even short term as you have) is annualized.

 

[HomeGuru]

JETX, I understood the interest to be a one time flat fee calculated at 5% of $2700. For only one month, not every month.
Such an interest demand would not be usurious.

 

[JETX]

HG, with all due respect, it is my understanding that monthly interest must be considered on an annualized basis to determine the 'actual' interest. If correct, then this would be usury.

I will admit though... "finance law" is not my forte, so I defer to the more knowledgable.

So, lets change my post to "MAY be usurious.... and if so, then the contract could be unenforcable".

 

[HomeGuru]

JETX, ok, let's say that your reasoning in correct. If the writer charged a cash advance fee on the loan in the same amount as she got charged ie. a dollar for dollar pass through, that would bring the actual interest down to 2%. Would the rate still be above the usury rate?
If so, then rather than call the amount interest, she should call it something else such as maybe a loan origination fee, handling fee etc.
In any case, my idea was for her to give the person a specifc time period to pay back the $800. And if no money is paid, sell the gold and keep the money from the sale.

 

[angeline]

thank you so much for your honest opinion. what i'm worried about is that i already helped him when he had a financial trouble and now he will turn the tables around and even have the nerve to harrassed me and threatened me to the police about charging him for the fees. my question is what are my chances of winning this horrible mess that i got into since i didn't have any written contract regarding his loan to me nor the necklace that i guess pawned to me. he doesn't have any proof to tell the authorities that we even had any transactions. Am i right about this?

 

[JETX]

WOW!! You mean that NONE of this was in writing???!!!

1) You 'loaned' him $2700.
2) He gave you a gold chain for security.
3) He paid you $1900 towards the loan.
4) You still have the gold chain!!

All types of things COULD happen:
- You can't prove that you loaned him anything.
- He can't prove that he gave you the chain as security.
- You can't prove that you even gave/loaned him any money.
- He can't prove that he paid you $1900. - You can't prove that he owes you anything.

At this point, it sounds like a stalemate. You won't give the chain without payment and he won't pay without the chain.

Tell him to pay you the promised money or he can "Tell it to the judge!".

 

[angeline]

hi! jetx, the only written agreement we have are the checks he had given me as a payment for the loan. i already cashed the $1900 which is a personal check from him and the rest of the checks are still with me to cash it. could that be a receipt that he paid me and there was a loan involved. regarding the necklace, i didn't give him a note that i'm holding it until whole balance has been paid for. so i guess the chain doesn't exist in my situation since there was no written contract that i was holding it. so if he goes to the authorities and make up stories about the whole situation will they be able to believe him or they will just request for more evidence. what are the possibilities that he would be able to get me in trouble?