Q: Is charging high interest on personal loans friends is punishable, if so how bad is it ?

A: It's not clear that ANY law enforcement agency will care about this?

BUT, there is a level of interest one can legally charge in CA and in

most other states, although it varies. Also, to legally loan money,

one usually needs a license, like a banking license??? I'd not worry

too much about the threat, and maybe maybe maybe IF it is enough

money, sue the other guy for the loan NOT any interest? BUT, it

may be time to move on from this biz...

A: Your friend has nothing much to worry about. The legal interest rate limit for an ordinary person loaning money in California is 10% APR. If your friend charges more than that, he can still sue the person who won't pay and ruin that person's credit, but the court probably won't let your friend recover any interest as a penalty for exceeding the interest rate limit.

A: In California, there are laws governing personal loans and the amount of interest that can be charged. These laws are designed to protect borrowers from predatory lending practices.

1. Usury Laws: California has usury laws that set limits on the interest rates that can be charged on personal loans. The maximum annual interest rate for non-exempt lenders is generally 10% for loans for personal, family, or household purposes.

2. Licensing Requirements: In California, anyone engaged in the business of making consumer loans (loans for personal, family, or household purposes) must be licensed under the California Financing Law (CFL) if the loans exceed a certain amount. Unlicensed lending can lead to legal consequences.

3. Potential Consequences: Charging interest rates above the legal limit can make the loan contract void, meaning the borrower may not be obligated to repay the interest or even the principal. In some cases, unlicensed lending can result in criminal charges, especially if it's determined that the lender engaged in willful and knowing violations of the law.

However, it's important to note that simply making a personal loan to a friend, in itself, is not illegal. The legality comes into question when the interest rates are excessively high or if your friend was engaged in a pattern of making loans as a business without proper licensing.

Your friend should consult with a qualified attorney who specializes in financial law or consumer protection. They can assess the specific details of the situation and advise on the best course of action.

In the future, it's crucial to be aware of and comply with state laws and regulations when engaging in any lending activities to avoid potential legal problems.