Usury-Applicability of State Usury Laws to Installment Sales

Plaintiff sued a vendor and a finance company to cancel a conditional sales contract and note, for return of payments made, and to obtain an unencumbered certificate of title to a house trailer. The trailer’s cash price was 5,000 dollars and plaintiff had paid 1,250 dollars down. Charges of 1,569 dollars were added, making the total time-price 6,569 dollars and leaving a time-balance of 5,319 dollars, payable in sixty monthly installments. The contract and note were immediately assigned to the finance company. Plaintiff based his claim on Nebraska’s Installment Loan Act, alleging that the difference between the cash price and the time-price was usurious in exceeding nine percent. Defendants denied that the time-price differential constituted interest within the meaning of the act. On appeal by the finance company from a judgment for plaintiff, held, affirmed, two judges concurring. A time-price differential in an installment sale, computed by applying a schedule of rates to the cash price, constitutes interest subject to the nine-percent limitation of the Installment Loan Act. Lluyd v. Gutgsell, 175 Neb. 775, 124 N.W.2d 198 (1963).