Maryland's Laws on Loans Essay

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Loans in Maryland

1. What is the maximum possible rate of interest for a loan made in Maryland, by a Maryland-based creditor?

Answer: 6%

2. Assuming that an unsecured consumer loan falls within the Interest and Usury subtitle, what would be the maximum rate of interest for a loan made by oral agreement?

Answer: There is no absolute maximum because there is no cap on rates for some kinds of loan.

3. Assuming that a loan falls within the Interest and Usury subtitle, which of the following would be FALSE?

Answer: To have an interest rate higher than 6%, all loans must be in writing.

4. Which of the following would NOT be covered by the definition of Creditor under TILA?

Answer: A store which allows an individual to buy a $500 computer, with the price payable in one month, on the condition that the individual also purchases a $50 extended warranty on the computer.

5. Suppose that you wanted to charge the highest possible interest rate on a $10,000 consumer loan, to an individual, not secured by real property (and assume that you did not care about any other factor but the interest rate).

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Which of the following kinds of loans would be the best for you?

Answer: A loan financing the sale of a five-year old car under RISA. 

6. Which of the following would be part of the “Finance Charge” under TILA?

Answer: A fee for obtaining a consumer report on the borrower to determine the borrower’s creditworthiness. 

7. Which of the following would NOT be part of the “Finance Charge” under TILA?

Answer: A fee for the administrative costs of drawing up the loan paperwork.

8. Suppose that a finance company in Delaware made an unsecured consumer loan, in writing, at an interest rate of 50% per year in Maryland. Has the finance company broken the law?

Answer: Yes, because the interest rate exceeds the maximum interest rate allowed by Maryland law.

9. Which of the following would NOT be a legal loan for a National Bank, based in a state which caps interest rates at 25%?

Answer: An secured consumer loan for the purchase of a 10 year old used car in its home state, at an interest rate of 27%.

10. Suppose that a.....

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Reference

“Borrowing Money.” (n.d.). Consumer Rights Session 10.

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