I just finished trying a usury case. The penalty for the lender is they get no interest at all on the loan. The reward for the borrower is they can get up to three times the amount of the interest paid as an offset to the principal.
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Yes, this cap applies, unless one of the many exceptions applies also. The exceptions include apply to loans made by CA licensed financial lenders, pawnbrokers, time payment contracts where the seller finances the purchase of goods by extending the payment over a period of time, etc... The usury laws also don't apply to loans made by a CA licensed real estate broker when the loan is secured (in whole or in part) by real estate.
Consult a lawyer to disclose exactly what kind of loan this is to see if you can challenge the interest. There are penalties involved, so you should find out if this loan's interest is enforceable before you make any repayments.
Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on, since each state has different laws, each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship.
I agree with Ms. Koslyn's excellent answer. Speak to a lawyer about this matter immediately and see what can be discovered. Spend the money on the lawyer and you'll usually get better results on this type of thing.