What is Usury?

Usury is the act of charging interest on a loan at rates that are considered excessively high or unfair, often crossing the legal maximum.

Definition

Usury simply means charging very high interest on a loan, especially beyond what’s considered fair or legal in a place. To protect borrowers from being overcharged or exploited, there are usury laws that put a limit on how much interest a lender can charge.

Purpose

Usury exists to identify and discourage lending that crosses the line into unfair or exploitative territory. It helps make sure borrowing stays reasonable and protects people from being charged extremely high interest rates or getting stuck in debt they can’t easily get out of.

Examples of Use

Personal loans: If someone charges very high interest on a small personal loan, it may be considered usury if it goes beyond legal limits.
Credit agreements: Loan contracts are checked under usury laws to make sure the interest rates stay within allowed limits.
Informal lending: Loans from unregulated moneylenders can sometimes carry excessively high interest rates, which may fall under usury.

Related Terms

Escrow

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Escrow is a financial arrangement in which a neutral third party holds money, documents, or property until certain benchmarks in the contract are met.

Bolster

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Acid Rain

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Acid rain is a phenomenon that happens when air pollution mixes with rain, snow, or other moisture before falling to the ground.

Notes

Usury laws are not the same everywhere and can vary a lot from one place to another.
What is considered “too high” or excessive interest depends on the local laws and how they define it.

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