What Does Usury Mean?

Usury is the illicit action of a person or a financial institution charging interest rates beyond the regulatory limits mandated independently by state laws. A usurious transaction typically involves a loan between a lender and borrower where the accrued interest rate percentage is deemed excessive. However, banks and other lenders that carry high interest rates as a stipulation when applying for loans are legitimate exceptions to usurious practices.


WorkplaceTesting Explains Usury

Individuals and/or financial firms involved in usurious actions are subject to substantial penalties that vary between states. Usury, also known as loan sharking, can impose serious legal repercussions, particularly if the crime is classified as a felony depending on established interest rate percentages (per state). A loan represents a financial trust between a lender and borrower that the principal and attached interest rate charges will be fulfilled within a designated time frame. When individuals apply for loans, it is recommended to know the statutory cap or limit on interest rates (usually between 5%-20%) prior to entering a formal arrangement with a licensed lender.

Victims of usury can bring legal suit against the individual or firm in question, claiming punitive damages that will compensate plaintiffs equal to the interest paid or, in some cases, triple the amount proportionate to the total amount paid. However, a borrower is still obligated to repay the outstanding principal at the time of maturity plus cumulative interest tacked on at the legal rate.

Usury is a serious offense where a felony conviction, in most cases, prevents job placement, in particular, the banking industry. The Equal Employment Opportunity Commission (EEOC) indicates in Title VII of the Civil Rights Act of 1964 that criminal records do not bar candidates from employment positions unless the nature of the offense is directly linked to the job description in a particular field.


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