A lawyer’s understanding of the laws that apply to loans is essential for effective collection efforts. In New Jersey, some loans fall under usury statutes, while others do not. “Usury” has come to take on a different meaning over time. Initially, it referred to interest and later came to mean substantial interest on loans. New Jersey usury statutes no longer apply to national banks doing business in New Jersey. This is a result of federal banking deregulation. The usury statute does not cover the following:
- Purchases under revolving credit accounts
- Installment loan purchases
- Purchases under credit accounts
Understanding which loans are subject to usury law and which loans are not is important, because under NJ statute Section 31:1-3, lenders forfeit the entire interest and are only entitled to the principal on loans when they violate the usury rate limits. However, interest rate regulation in New Jersey is a complex area of law, also affected by case rulings. Lenders’ interest rates on consumer loans valued at $15,000 or less can be as much as 30 percent compared with rates on loans ranging between $15,000 and $50,000 that only reach 16 percent. When collecting on a debt, law firms sometimes encounter consumers who dispute the amount owed, which in turn can lead to litigation or settlement negotiations to resolve the issue.
Being successful in recovering loan debt frequently requires having a knowledgeable attorney available to handle loan collections for you.