Can a person loan money to people they do not know in exchange for interest?

[muns1967]

pay taxes on the interest ofcourse, but just wondering if it was legal to do in the first place.

[Bsch4477]

Sure. Banks do it all the time! You should have a written agreement. 

[Opus 17]

We can’t tell you if there may be state laws regulating the making of loans. Certainly, most states have laws setting a maximum interest rate, and if you charge more than the interest rate you can be hit with various penalties.  The IRS doesn’t object as long as you pay income tax on the interest.