Are Late Charges subject to Usury Laws?
Last Review
Last Update
Statutes
No statutory language available.
Cases
Contractual late charges on overdue commercial accounts are not subject to usury laws because they do not constitute payment for the loan or forbearance of money. Southwest Concrete Products v. Gosh Const. Corp. (1990) 51 Cal.3d 701, 704, 274 Cal. Rptr. 404, 406, Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 801-802, 35 Cal.Rptr.2d 418,425.
Comments
The courts have held that late charges are a contingency under the debtor's control (i.e., timely payment) and therefore cannot be considered to be usurious. However, if the claimed late charges are unrelated to Plaintiff's actual damages, the obligation may be deemed to be an unenforceable penalty or interest on a loan or forbearance of money and therefore usurious.
Contributors
Marshall F. Goldberg
The statutory information was edited and reviewed with the support of MultiState
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