California Supreme Court: Loans with 200+ percent interest rates are ‘unconscionable'

In a class-action suit filed in San Francisco against the prolific lending company CashCall, the court ruled unanimously that state regulators, or judges, could intervene whenever interest rates are “unreasonably and unexpectedly harsh.”

CashCall specializes in consumer loans to high-risk borrowers. From 2006 to 2011, the period covered by the suit, the company offered unsecured $2,600 loans, payable over 42 months, with interest rates of 96 percent, later increased to 135 percent.

The company now charges 210 percent interest for those loans, with interest amounting to four times the amount of the loan or more, said James Sturdevant, lawyer for the borrowers who filed the suit. Its advertising slogan is “Make the CashCall.”

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