A Texas consumer loan is written at 9.5% a year and the lender holds no Chapter 342 license. Does a loan charging 9.5% fall within Chapter 342 solely by reason of its rate?
Correct Answer
C) Outside the chapter: a loan at 10% a year or less is not subject
Except as otherwise fixed by law the maximum rate of interest is 10 percent a year, and a loan providing for 10 percent a year or less is not subject to the chapter. Other choices: not every consumer loan is inside it, which is what the rate test decides; the term of the loan is not the test; and the borrower being an entity is not what puts a loan outside. Source: Tex. Fin. Code sec. 342.004(a) and (b)
Why This Is the Correct Answer
Except as otherwise fixed by law the maximum rate of interest is 10 percent a year, and a loan providing for 10 percent a year or less is not subject to the chapter. Other choices: not every consumer loan is inside it, which is what the rate test decides; the term of the loan is not the test; and the borrower being an entity is not what puts a loan outside. Source: Tex. Fin. Code sec. 342.004(a) and (b)
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