Speedy Cash Excessive Rate of Interest on Loans California Class Action

States sometimes limit the amount of interest lenders can charge for their loans. The complaint for this class action brings suit against Speedy Cash, alleging the company charges more interest than is permitted under the California Financing Law and for violating other state laws. It claims Speedy is “preying on California consumers with usurious loans and unfair collection practices.”

The class for this action is all persons in California who entered into a consumer loan agreement with Speedy Cash that required them to pay a higher interest rate than is statutorily permitted or an otherwise unconscionable rate, between October 14, 2017 and October 14, 2021.

The plaintiff for this class action, Peter Kato, borrowed $3,600 from Speedy Cash, in September 2017, putting up his car as collateral. The interest rate for his loan was 95.737% APR. The loan terms required that he pay forty-four installments of $266.29 and one of $267.30, with the loan term ending in February 2021. This adds up to more than $12,000 in payments.

The complaint alleges that Kato “incurred actual financial losses due to the outrageous and unlawful interest rates charged to him by Speedy Cash.” It adds, “This is Speedy Cash’s business model.”

Not only are the interest rates excessive, the complaint says: “The loans are presented without any actual or reasonable opportunity for review. A reasonable consumer would not understand the interest and penalty provisions by virtue of the method Speedy Cash uses to present the information.”

The complaint alleges, “When consumers fall into default, Speedy Cash compounds its profits by accelerating loan balances and requiring immediate payment of the full principal, adding default interest and penalties and subsequently aggressively pursuing collection efforts.”

Speedy Cash lends to people who have an urgent need for cash and who have limited access to credit. It does not appear to worry about whether consumers can repay the loans during the scheduled period. In Kato’s case, his vehicle was collateral for the loan and could be repossessed by Speedy if he did not pay his loan.

The complaint alleges that Speedy “mak[es] significant amounts of money from California consumers through false, deceptive, and misleading means…” and that its violations were knowing and intentional.

The counts include violations of California’s Unfair Competition Law, for which the “unlawful” prong encompasses the violation of the California Financial Code. The complaint does not, however, specify the maximum permitted interest rate under that code.

Article Type: Lawsuit
Topic: Loans
Tags: Excessive Interest Rate, Payday Loans