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Usury Rate

Candlefocus Editor
Usury rates are typically far above typical market rates for any form of loan, often falling into triple or quadruple figures. Banks are traditionally the standard sources of loans and they typically charge interest rates somewhere between 4-10%, though this can vary depending on the amount borrowed and length of the loan term. Skirting regulations, which exist to protect consumers from damaging debt, predatory lending practices often set usurious rates, typically far above the rates applied by established banks and lenders.

In the United States, usury laws vary from state to state. Nearly all states have regulations that limit the amount of interest a lender can charge on some types of loans. On the other hand, some states have deregulated high-risk loans, allowing lenders to set their own interest rates, albeit within limits. For example, Tennessee law caps the annual rate at 6%, while North Carolina statutes allow contracts with interest rates of up to 16%.

Usury law can be complex, given the numerous cases of ethical and legal lines which exist between high-interest rates and usury. Consumers who take out predatory loans may find themselves in severe debt, due to the extremely high rates often associated with these loans. They should, therefore, take all steps necessary to protect themselves from usurious rates of interest.

Before signing any agreement for a loan, consumers should research the lender and check if it is licensed and in accordance with the laws of their respective state. Consumers should also compare interest rates from multiple lenders by scouting out the best deal and understanding the terms, conditions, and penalties associated with the loan.

In many cases, an excessively high interest rate is an indication of a usurious loan and should be avoided at all cost. Usury rates should not be confused with high-risk loans, where lenders may charge an elevated interest rate to compensate for higher risks associated with the loan. Whenever in doubt, consumers should always consult a qualified attorney or financial services professional to ensure that they are not signing a contract that sets an illegal interest rate.

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