According to the court, the sale of goods and/or services to a buyer on credit is not a loan. 8333% monthly periodic interest rate to compute the late charge for your account for that month.Ī simpler version for placement in an invoice is: Payment Due Net 30 Interest at 1% per month after 30 days.īut what about Usury? Doesn’t California law limit interest to 10% per year?Ĭalifornia’s usury laws apply to loans and forbearance on a loan. We will then multiply this amount by the. Your unpaid balance is determined by taking the beginning balance of your account for each month, adding any new charges and subtracting any payments made to your account. 8333% interest per month (10% per year) will be imposed on your unpaid balance after 30 days. If we do not receive payment in full on any invoice within _ days, late charges at. Payment is expected upon the provision of services / receipt of goods. For example, you may wish to include language to the effect that: If you provide services or materials, then you should include an interest provision in your contracts or invoices. Unlike late charges which the law disfavors, interest or finance charges on unpaid bills is generally allowed so long as reasonable (up to 18%).ĬAUTION: While 18% has been upheld in some courts, such a high amount of interest may be challenged as an unreasonable penalty, or liquidated damage. According to the California Supreme Court, interest charges on unpaid invoices for goods and services are legal if the right to collect interest is set forth in your contract, or invoice, and if the mount of interest being charged is reasonable.Īccording to the California Supreme Court, contractual obligations for payment of interest charges (even if over 10% per annum) on late payments is valid, legal and not subject to California’s usury limitations.
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