Usury Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Usury, written in plain English, along with examples of how it is used.
What is Usury?
(n) Law prevailing in the land fix the upper interest rate chargeable on debt instruments. If the interest rate charged on a debt exceeds this limit, it is called Usury. Usury payment cannot be enforced by law
History and Meaning of Usury
Usury is a term that has been used since ancient times to describe the practice of charging excessive interest rates on loans. The concept of usury has been present in many societies throughout history, with laws and regulations being put in place to prevent lenders from taking advantage of borrowers. In many cultures, charging interest was considered immoral or unethical, while in others it was seen as a necessary evil, but one that needed to be strictly regulated.
In modern times, usury has a more specific legal definition that varies from country to country. In most cases, it refers to charging an interest rate on a loan that is higher than what is allowed by law. This is done to protect borrowers from being exploited by lenders who might otherwise charge exorbitant rates and use unethical tactics to collect on their debts.
Examples of Usury
- A lender offers a borrower a payday loan with an annual percentage rate (APR) of 400%. This is well above the legal limit in most jurisdictions, and would be considered usury.
- A credit card company charges interest rates that are much higher than the prevailing market rates. While not explicitly illegal, this practice could be seen as usurious, especially if the rates charged are deemed to be excessive.
- A loan shark offers a desperate borrower a loan with interest rates that are far above the legal limit. This is a classic example of usury, and is illegal in most countries.
Legal Terms Similar to Usury
- Predatory lending: A practice whereby lenders use abusive or unfair tactics to take advantage of borrowers, often by charging high interest rates and fees.
- Interest rate ceiling: The maximum interest rate that can be charged on a loan, as set by law or regulation.
- Loan shark: An informal lender who charges extremely high interest rates and often employs violent or coercive tactics to collect on debts.