Help! Short Term Lending-need Advice
I have an opportunity to loan someone $15k and he is willing to let me put a second trust deed on the property for $20k and have anote for 29% interest. He will be getting financing to pay me off in about 3 weeks ( I know the loan officer and he is already working on it). With the $20k lein I will put on the property the CLTV would be 70%...My question is: What type of contract should I use for this and is it even legal? Where can I get a contract for this? Please help with some advice due to the fact he needs the money by next week.
Thank you for any help
Chad Young
I don't know much about paper investing, but isn't a 29% interest rate illegal? Usury?
Perhaps I misread...
Best of luck!
That's what I need to know...any information you can come up with let me know.
Check with your state concerning usury laws, but it is likely that is illegal.
Best Regards,
Lynn Adams
This is a question for your attorney. You need to do research on what your state's usury laws are. I did a quick search and i found a 10% number but that obviously isn't correct as credit cards charge more than that!
There is sufficient profit in this to make your time talking to your attorney well worth it. GOOD LUCK
29 % is definately usury in Ca. Check out this site by the Atty Gen. for info.
webhttp://caag.state.ca.us/consumers/general/usury.htm
The reason your credit cards are at a much higher rate is because banks are allowed to play by different rules.
I Did a deal similar to this many years ago. I had a partner who was, and is still, way more savy than I. He structured the deal so we got a higher interest rate but due to some discounting of the note it was not usury. Sorry, cant give further info on that......too long ago.
Good luck! Brian
now that I know the rate is too high, how about the contracts that are used? where can I find a good one to use?
You can create as a business loan instead of a loan for personal or for househood. Then your loan might be exempt from the max interest rate defined under usury laws.