Under California law, what is the penalty for a lender who charges a usurious interest rate?
Correct Answer
B) The lender forfeits all interest on the loan and the borrower may recover treble damages
Under California Civil Code and constitutional provisions, a usurious lender forfeits ALL interest (not just the excess) and the borrower may sue for treble (triple) the amount of interest paid in the preceding year. This harsh penalty is designed to strongly deter usury.
Why This Is the Correct Answer
Under California Civil Code and constitutional provisions, a usurious lender forfeits ALL interest (not just the excess) and the borrower may sue for treble (triple) the amount of interest paid in the preceding year. This harsh penalty is designed to strongly deter usury.
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