finance
usury
Usury is charging interest above the maximum rate permitted by law. Usury limits are set mainly by state law and vary widely, with many exemptions for certain lenders, loan types, or federally related first mortgages. A lender who charges a usurious rate may face penalties such as losing the right to collect interest. Usury laws are intended to protect borrowers from excessive interest charges.
- Exam tip
- Usury is a state-law concept and limits vary by state; federal law preempts state usury caps on many first-lien residential mortgages.
- Example
- A private lender charges 30% annual interest on a home loan in a state with a 16% cap, making the loan usurious.
Related terms & state variants
Sources
Source verification pending. Confirm current requirements with your state regulator.
Last verified: 2026-10-23