Promising to Pay a Higher Interest Rate In the Event of Loan Default
In Casaccio v. Habel. 14 Ill. App. 3d 822, 303 N.E.2d 548 (1973), Habel borrowed $ 122,000 at 18% interest but promised to pay interest at the rate of 24% in the event of a default.
Upon default, Habel maintained that plaintiffs were liable for the interest payments because he was acting on their behalf when he entered into the loan transaction.
This court disagreed and ultimately stated that "Habel must bear the burden of the high interest rates because he entered into such an agreement." Habel. 14 Ill. App. 3d at 826.
Accordingly, this court affirmed the circuit court's judgment that Habel was liable for interest at the rate of 24% per annum from the date of default.