Which of the following is correct if the interest rate in a loan is void?
A)The contract is totally inexistent.
B)The creditor cannot recover interest at all.
C)The creditor can recover legal rate of interest.
D)The court shall rule as if no interest has been agreed upon and contrary to law.

Question

Quizplus · Accepted Answer

When the interest rate in a loan is void, the creditor can still recover the principal amount of the loan and is entitled to the legal rate of interest as compensation, even though the agreed-upon interest rate is nullified. This ensures that the creditor is not unduly penalized for an illegal interest rate, while also protecting the debtor from usurious practices.

Which of the Following Is Correct If the Interest Rate