Highest interest rate - Posted by Park

Posted by Park on June 22, 2007 at 22:57:02:

Thank you, David for your response.

I understand about the exemption now and the interest rate limits.

I also picked up a little info on recourse. If recourse to a loan I made to a buyer only extended to the collateral (a mobile home)and not to the buyer personaly, could I charge a higher rate?

I understand that I can offer a high rate to a note buyer by selling at a deep discount as long as I do not offer full recourse. And can only charge 10% or less if the sale offers full recourse.

Does this limited-recourse/full-recourse scenario also apply to a note I would take back upon the sale of a mobile home?

Thanks again, Park

Highest interest rate - Posted by Park

Posted by Park on June 18, 2007 at 12:00:31:


I’m in California. I would like to finance the sale of an old mobile home I’ve fixed
up and will be selling.

Does anyone know what is the highest interest rate that a private seller can
charge on a note secured by a mobile home in California?

I don’t want to break any usury laws here by applying too high of an interest

Thanks, Park

Re: Highest interest rate - Posted by David Butler

Posted by David Butler on June 18, 2007 at 15:18:50:

Hello Park,

In general, a seller-financed note is exempt from usury laws at it’s inception. This exemption passes to any purchasor of the note as well, so long as the seller, or any party assisting in the sale of the note, do not commit acts which denudes the note of the exemption.

If you are a “dealer”, buying, fixing and reselling homes for profit, you are not considered an exempt seller, in which case, you are limited to a 10% interest rate on the notes. Another exception in that case - obtaining a lender’s license - which then also allows you to charge whatever the market will bear (at least in California, last time I checked several years ago).

Hope that helps, and Many Happy Returns

David P. Butler