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Warning
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Simple English definitions for legal terms
usury
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A quick definition of usury:
Usury is when someone lends money to another person and charges them too much interest. This means they are making the borrower pay back more money than they borrowed. It is against the law to charge too much interest on a loan. Usury is when someone breaks this law and charges too much interest. There are three things that make a loan usurious: (1) lending money, (2) agreeing to get the money back, and (3) charging more interest than the law allows. Each state has its own rules about how much interest can be charged on a loan.
A more thorough explanation:
Usury is when a lender charges a borrower an interest rate that is higher than what is allowed by law. It is also the act of making a loan at such a high interest rate. Usury is illegal and is usually defined by state laws.
There are three essential elements of usury:
- A loan or forbearance of money
- An agreement for a return of the money in all events
- An agreement to pay more than the legal rate of interest for its use
For example, if someone borrows $100 and agrees to pay back $150 in one month, that would be considered usury if the legal interest rate is only 10%. The lender is charging an interest rate of 50%, which is much higher than what is allowed by law.
Another example would be if a payday lender charges a borrower an interest rate of 400% on a short-term loan. This would also be considered usury because it is much higher than the legal interest rate.
These examples illustrate how usury is when a lender charges a borrower an interest rate that is much higher than what is allowed by law. It is important for borrowers to be aware of the legal interest rates in their state and to avoid lenders who charge usurious rates.