California’s legal framework places limits on the interest rates that can be charged on certain types of loans. However, specific categories of lenders and transactions are excluded from these restrictions. This allows them to operate outside the standard interest rate caps, providing greater flexibility in lending practices. For example, loans made by state or federally chartered banks are typically exempt, as are loans secured by real estate made or arranged by a licensed real estate broker.
These exclusions play a significant role in the state’s financial landscape. They enable a broader range of lending options, supporting investment and economic activity across various sectors. Historically, these provisions were enacted to encourage institutional lending and ensure the availability of capital for critical sectors like housing and business development. The existence of these exceptions recognizes the varying risks and costs associated with different loan types and lender categories.