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Under the CFL, what is the maximum interest rate a licensed finance lender can charge on a consumer loan of $2,500?

Correct Answer

D) 36% per annum plus the federal funds rate

For a California Financing Law consumer loan with a bona fide principal amount of at least $2,500 but less than $10,000, Financial Code section 22304.5 caps charges at an annual simple interest rate of 36% per annum plus the federal funds rate.

Answer Options
A
10% per annum
B
2.5% per month
C
Any rate agreed upon by the parties
D
36% per annum plus the federal funds rate

Why This Is the Correct Answer

For a California Financing Law consumer loan with a bona fide principal amount of at least $2,500 but less than $10,000, Financial Code section 22304.5 caps charges at an annual simple interest rate of 36% per annum plus the federal funds rate.

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