I recently borrowed $1,400 from Sun Loan Company. The loan was established on 10/27/08 with the first payment of $170 due on 11/27/08. I never cashed the loan check and feel that Sun Loan should waive this first interest payment and start the loan when I cash the check as a courtesy of a long business relationship. Sun loan refuses to work with me and said I must make a payment of $170 today and then I can go cash the check. Is this legal? Should Sun Loans waive this?
Although your lender could decide to forgo the interest for the period of time before you cashed the check, it certainly is not obligated to do so. Once the lender issued the loan proceeds, it began earning interest on the loan contract. That you failed to cash the loan check doesn't change that fact. Even though you didn't use the funds, you certainly controlled them and the lender could not use them to fund other loans, so the lender is entitled to its interest charges. Sometimes a borrower asks to cancel a loan within one or two days of receiving loan proceeds, but even then it would not be unreasonable for the lender to impose some sort of fee, assuming that state law permits it, but it's unreasonable to expect a lender to waive a full month's interest.
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Although your lender could decide to forgo the interest for the period of time before you cashed the check, it certainly is not obligated to do so. Once the lender issued the loan proceeds, it began earning interest on the loan contract. That you failed to cash the loan check doesn't change that fact. Even though you didn't use the funds, you certainly controlled them and the lender could not use them to fund other loans, so the lender is entitled to its interest charges. Sometimes a borrower asks to cancel a loan within one or two days of receiving loan proceeds, but even then it would not be unreasonable for the lender to impose some sort of fee, assuming that state law permits it, but it's unreasonable to expect a lender to waive a full month's interest.