Expert: Finance Guy - 8/26/2009

Question
question how to figure out if usury interest has been charged? Rhode Island law.principle amount under 1,000,000 for inventory financing. Lender charged interest before they advanced the funds to vendor then calculated interest and divided the amount collected over 360days instead of when partial balance was paid. if each inventory had its own interest start and finish date why or should the debt become one whole debt and be divided by 360 days to avoid usury?

Answer
It is actually a great question...

I am surprised that more borrowers do not question their interest charges.

Of course the combination of fees and interest is usurious, at least in the literal sense, anyway.

Whether they are usurious in the legal sense or whether you can prove that they are and whether you can get an attorney at a reasonable enough rate to pursue your claims are entirely different questions.

I would confront your lending officer and ask him (or her) to explain charges.

That will frustrate them and let them know you are watching and holding them accountable.

Next, try and get a different inventory lender or find a bank to give you a revolving note to pay off your inventory financing.

Cash is king right now, so lenders and bankers have an upper hand.

However, there is private money available.

Find some individuals with capital who are sick of making 2% on their CD's.

Good luck to you.