usary laws says 6% in pennsylvania - Posted by Tom K

Posted by Ralph Lich on September 28, 2003 at 08:10:26:

I live in NYS, Providian visa card, located in NH, they are charging me 29% interest, isn’t this way out of line? What can I do to decrease the %. Help!

usary laws says 6% in pennsylvania - Posted by Tom K

Posted by Tom K on August 31, 2003 at 07:46:39:

I looked up the usary laws in P.A. It has a cap of 6%. If the standard on mobile homes is 12.75% how do you guys(I would say guys and girls but I’m not politicaly correct)handle this? One more question, how much of a cut does the state and uncle sam take when they become your partner(TAXES).
thanx, Tom

Re: usury laws say 6% in pennsylvania - Posted by Benny

Posted by Benny on August 31, 2003 at 17:53:31:

Tom, where are you getting your information? You say below that “banks…are different…” However, as an installment seller in PA, you are regulated by the Dept. of Banking and come under these rules:

{{{Section 19. Finance Charges.–
A. A seller licensed under the provisions of this act shall have the power and authority to charge, contract for, receive or collect a finance charge, as defined in this act, on any installment sale contract covering the retail sale of a motor vehicle in this Commonwealth, which shall not exceed the rates indicated for the respective classification of motor vehicles as follows:
Class I. New motor vehicles, except those having a cash price of ten thousand dollars ($10,000) or more and used primarily for commercial purposes and except mobile homes and except new trucks or truck tractors having a manufacturer’s gross vehicular weight of fifteen thousand (15,000) pounds or more and new semitrailers or trailers designed for use in combination with truck tractors, eighteen percent (18%) simple interest per year on the unpaid balance.
Class II. Used motor vehicles of a model designated by the manufacturer by a year not more than two (2) years prior to the year in which the sale is made, eighteen percent (18%) simple interest per year on the unpaid balance.
Class III. Older used motor vehicles of a model designated by the manufacturer by a year more than two (2 years prior to the year in which the sale is made, twenty-one percent (21%) simple interest per year on the unpaid balance.
Class IV. New motor vehicles having a cash price of ten thousand dollars ($10,000) or more and used primarily for commercial purposes, and except new trucks or truck tractors having a manufacturer’s gross vehicular weight of fifteen thousand (15,000) pounds or more and new semitrailers or trailers designed for use in combination with truck tractors, seven and one-half percent (7 1/2%) per year.
Class V. New mobile homes, such percent established as a maximum finance charge for mobile homes by regulation of the Federal Housing Administration, pursuant to the National Housing Act of June 27, 1934 48 Stat. 1246), whether or not the mobile home is subject to a sale on credit or loan insured or guaranteed in whole or in part by such administration.
Class VI. New trucks and truck tractors having a manufacturer’s gross vehicular weight of fifteen
thousand (15,000) pounds or more and new semitrailers and trailers designed for use in combination with truck tractors, ten percent (10%) per year.}}}

BTW to be politically correct you would have to say “guys and GALS”.

Re: usary laws says 6% in pennsylvania - Posted by Lyal

Posted by Lyal on August 31, 2003 at 15:06:18:

Tom,
Is this for personal property lending?
Call the local banks and see what they charge. Also call some of the “edge” lenders like Beneficial Finance (it may be HFC now) etc and see what their rates are.
Also, If you’re serious about getting into this business, this is one of those questions best posed to an attorney for a written opinion. Well worth the couple hundred bucks it may cost you.
Lyal

Re: usary laws says 6% in pennsylvania - Posted by Tony-VA/NC

Posted by Tony-VA/NC on August 31, 2003 at 10:40:11:

I have done business in states covered by your post below stating the usury limits of many states. The opinions I received from attorneys differs from the information you have provided.

But as I have posted in the past, you need to get over the interest rate as a means of profit. It is not. Your understanding of Lonnie’s methods and the ability to manipulate the terms of the sale is where money is made.

As an investor, you are seeking profit through yield. If your state only allows 6% then put that down on the contract. Few people ever ask the interest rate anyways, unless you bring it up as a marketing tool (ie. 0% financing).

If you want to obtain a certain yield, you simply increase one or more of the other factors in the equation. Down payment (not always easy to do). Monthly payment (not hard to negotiate so long as you remain reasonable). Number of payments. This is likely to be your easiest profit center. Add a few payments to the note if you need to get that yield up.

In a nutshell, Lonnie deals (to me) are simply a means of creating monthly income. If that monthly payment is $250, I do not care if less of it is an interest payment (6% vs. 12.75%). It is still $250 in my pocket at months end.

There is no reason to worry about the interest rate. Simpy compensate on the other factors and you will be fine. In fact, your low interest rate may well be a marketing tool for you.

Tony

Re: usary laws…Doubt this very seriously - Posted by Greg Meade

Posted by Greg Meade on August 31, 2003 at 08:27:38:

as that would put FHA and others in violation of state laws. Use the usury limit for autos as a guideline. If PA uses 6% limit on all loans(credit card, auto, signature. mortgage, commercial, etc.) I will switch all my account balances to this wonderful state! Where are you getting your info? Read Ernest’s and Lonnies books for info on taxes. You do have a partner for life with the IRS regardless of what you do!

Re: usury laws say 6% in pennsylvania - Posted by Tom k

Posted by Tom k on August 31, 2003 at 18:45:47:

I did a search on google and can up with a couple of web sites that showed usury laws for each state. but if your an installment seller in PA. I’ll take your word for it. thanks for the info, I stand corrected! BTW- do you know the laws governing the sales of mobile homes in P.A. I read so much conflicting stuff in achives and websites.

Re: usary laws…Doubt this very seriously - Posted by Tom K

Posted by Tom K on August 31, 2003 at 08:31:46:

Banks, auto dealers and commercial rates are different. I went to three different sites and the rate cap is 6%. In New York it’s 16% 25% for commercial.
Tom

Call… - Posted by Benny

Posted by Benny on September 02, 2003 at 15:06:06:

…the Pa Dept. of Motor Vehicles and they will send you a packet of everything required. You will need to have an office and will be inspected twice.

Re: usary laws…Doubt this very seriously - Posted by Tom K

Posted by Tom K on August 31, 2003 at 08:51:05:

New Hampshire10%Any rate agreed toSpecial ProvisionNo Special RateNew Jersey6%16%No ProvisionNo Special RateNew Mexico15%As agreed by parties in writing8.75%No Special RateNew York16%SpecialProvisionSpecial Provision9%Special ProvisionNo Special RateNorth Carolina8%16% $25,000 or less; any rate over $25,0008%Any Rate AgreedNorth Dakota6%See Note 212%No Special RateOhio10%8%; Any rate for business loans10%No Special RateOklahoma6%Any rate unless subject to U.C.C.Special ProvisionNo Special RateOregon9%See Note 39%No Special RatePennsylvania6% to $50,000 8.5%6%No Special RateRhode Island12%21% or alternative rate of 9% plus domestic primerate12%No Special RateS. Carolina6% or 8.75%,See Note 4Any rate or as provided in Consumer ProtectionCode12%No Special RateSouth Dakota15%Any rate unless specifically limited by Code12%Any rate unlesslimited by CodeTennessee10%4% over average weekly prime rate10%No Special RateTexas6%Any rate agreed to up to 18%. Special ProvisionSpecial ProvisionSee Note 12Utah10%Agreed rateAgreed RateNo Special RateVermont12%Legal RateNo ProvisionNo LimitVirginia8%12%; any rate on non-agricultural loans8%No Special RateWashington12%12%Special ProvisionNo Special RateWest Virginia6%8%; See Note 510%No Special RateWisconsin5%No Limit12%No Special RateWyoming7%See U.C.C.10%No Special RateIndicates judgment rate applies unless other rate specified in contract. Where “No special rate” for corporations, the legal or contractrate applies.Special Provision: Consult with state authority.Note 1. Nevadalegal rate and judgment rates are 2% over prime rate at largest bank in state on January 1 or July 1 immediately precedingjudgment.Note 2. North Dakotacontract rate is 5.5% over the average rate for 6-month U.S. Treasury bills but not less than 7%.Note 3. OregonThe rate of interest shall be as agreed between the parties, except (a) on loans under $50,000 the rate shall not exceed greater of12% or 5% in excess of discount rate on 90-day commercial paper at the Federal Reserve Bank and (b) if parties have not otherwise agreed, rate inthe following transactions is 9%: (i) all moneys after they become due (open accounts bear interest from date of last item), (ii) money received to useof another and retained beyond reasonable time without consent and (iii) money due when there is a contract to pay interest and no rate is specified.Note 4. South Carolinalegal rate is 8.75% when term “legal rate” is used in contract, judgment or document.Note 5. West VirginiaLender, sellers and other creditors are authorized to charge, as an alternative to other rates under any provision, up to amaximum rate fixed by the Lending and Credit Rate Board (18% in December 2000). No law limiting interest rates may be applied to any debtincurred by a loan, installment sale or similar transaction primarily for a business purpose.Abridged copy. July 2001Permission to reprint obtained fromCommercial Collection Agency Association, Commercial Law League of America

Re: usary laws…you did not send FL… - Posted by Greg Meade

Posted by Greg Meade on August 31, 2003 at 09:05:01:

but i know it is 18% (gottaluvit). would like to hear from other investors from other states. I note you used a collection company rate here in your post. The on foolproof way to find out is to ask a real live atty. in your state…a phone call should do it and please post your response so we know the rest of the story!