Legality of charging 2% per month??

[BushBaby]

I was under the impression that companies making loans were compelled to offer those loans at an interest rate of 1% per month or less! I appreciate that most lending organisations got round this law by charging a fixed sum rather than stating the actual monthly % rate, so that they could argue that the sum was made up of 1% per month PLUS office charges (Otros). In view of the fact that the Government has permitted the Central Bank to pay 28% - 30% per annum on Certificados, they are obviously going to allow LOANS at greater returns than the ineterst rate they are paying out & that means they are going to be charging in EXCESS of 2% per month (nearer 4% I would suggest).
As it would be MOST difficult to justify 1% as the monthly interest rate & nearly 3% per month in 'OTROS', has this law been changed? If NOT, what is the Governments position in condoning banks & finance houses to break the law?? - Grahame.

[TM3]

As far as I know, the new codigo monetario eliminates the former usury laws, and allows whatever interest rates the parties agree upon. Does anyone know if this is true and when this codigo comes into effect?

[Hillbilly]

Money, like sex, can charge what the market will bear.
How about 1% per day? It happens all the time.
And, as so often happens, you are right about interests rates going up as high as 40%. I saw where some are saying they will hit 50% as a result of these new bonds at 28%/30 days; 29%/60 days and 30%/90 days...
My bet is that the country is "dollarized" withn a few years. It nearly is now. What company that sells goods or services that require investments in dollars, can afford to publish a price list?

Good post BB,

HB

[Escott]

Originally posted by TM3
As far as I know, the new codigo monetario eliminates the former usury laws, and allows whatever interest rates the parties agree upon. Does anyone know if this is true and when this codigo comes into effect?

While this is true, before this came into affect the way around it was a commission per month to make it legal which I did on a mortgage I gave out.

Escott

[Hillbilly]

Back in the "hollars" of WVa, they say that "there are lot's o' ways to skin a cat...." Yeah, that monthly 'fee' takes a lot of the money...

HB

[Fabio J. Guzman]

Article 91 of the Monetary and Financial Code expressly abrogated Law 312 of 1919 (enacted by the U.S. Military Government!) which had established a 12% p.a. ceiling on interest rates.

The Code came into effect on November 27, 2002. There are no usury laws in the DR since that date.

[BushBaby]

Thanks for the up-date Gentlemen - it's nice to keep up-to-date with these things.
Regardless of what the pesos rate goes up to, I think I will continue to keep my investments in US $ for the time being. They will be there 'IF/WHEN' we go Dollarised!! - Grahame.