Usury

Usury refers to a rate of interest on a debt/loan which is so high that it is deemed in excess of the percentage rate allowed by law.

Additional Sources

Answers.com

The practice of lending money and charging the borrower interest, especially at an exorbitant or illegally high rate.

An excessive or illegally high rate of interest charged on borrowed money.

Duhaime Legal Dictionary

Most countries now prohibit interest rates above a certain level; and rates which exceed these levels are called usury.

Law.com Dictionary

A rate of interest on a debt which is exorbitant and in excess of the percentage allowed by law. Each state sets its own maximum interest rate. Courts will not enforce payment of interest on a loan if the rate is usurious, so a loan may result in being interest free. Charging usury as a practice is a crime, usually only charged if a person makes a business of usury, sometimes called "loan-sharking." Banks and other commercial lenders generally are not subject to anti-usury laws, but are governed by the marketplace and the competitive rates triggered by loan rates to institutions set by the Federal Reserve Bank.

Lect Law Library

The civil or criminal wrong of charging interest that is beyond the legal limit set by a State. The illegal profit which is required and received by the lender of a sum of money from the borrower for its use. In a more extended and improper sense, it is the receipt of any profit whatever for the use of money: it is only in the first of these senses that usury will be here considered.

To constitute a usurious contract the following are the requisites: 1. A loan express or implied. 2. An agreement that the money lent shall be returned at all events. 3. Not only that the money lent shall be returned, but that for such loan a greater interest than that fixed by law shall be paid.

There must be a loan in contemplation of the parties and if there be a loan, however disguised, the contract will be usurious, if it be so in other respects. Where a loan was made of depreciated bank notes to be repaid in sound funds, to enable the borrower to pay a debt he owed dollar for dollar, it was considered as not being usur-ious. The bona fide sale of a note, bond or other security at a greater discount than would amount to legal interest, is not per se, a loan, although the note may be endorsed by the seller, and he remains responsible. But, if a note, bond; or other security be made with a view to evade the laws of usury, and afterwards sold for a less amount than the interest, the transaction will be considered a loan and a sale of a man's own note, endorsed by himself, will, be considered a loan. lt is a general rule that a contract, which, in its inception, is unaffected by usury, can never be invalidated by any subsequent usurious transaction. On the contrary, when the contract was originally usurious, and there is a substitution by a new contract, the latter will generally be considered usurious. There must be a contract for the return of the money at all events; for if the return of the principal with interest, or of the principal only, depend upon a contingency, there can be no usury; but if the contingency extend only to interest, and the principal be beyond the reach of hazard, the lender will be guilty of usury, if he received interest beyond the amount allowed by law. As the principal is put to hazard in insurances, annuities and bottomry, the parties may charge and receive greater interest than is allowed by law in common cases, and the transaction will not be usurious.

To constitute usury the borrower must not only be obliged to return the principal at all events, but more than lawful interest: this part of the agreement must be made with full consent and knowledge of the contracting parties. When the contract is made in a foreign country the rate of interest allowed by the laws of that country may be charged, and it will not be usurious, although greater than the amount fixed by law in this.

Legal-Dictionary.org

An overly high and illegal rate of interest on a debt.

The Free (Legal) Dictionary

The crime of charging higher interest on a loan than the law permits.

State laws set the maximum amount of interest that can be charged for a loan of money. A lender that charges higher than the maximum amount of interest is guilty of the crime of usury. In addition, courts may modify contracts that contain usurious rates of interest by reducing the interest to the legal maximum.

Wikipedia

Usury originally meant the charging of interest on loans. This included charging a fee for the use of money, such as at a bureau de change. After interest became accepted, usury came to mean the interest above the rate allowed by law. In common usage today, the word means the charging of unreasonable or relatively high rates of interest.