Usury

[claybizz]

Is Usury still illegal and at what rate of interest does it become so ? I have just seen a TV advert for short term loans that works out at an APR in excess of 2300%. Surely this cannot be allowed.

[R1Geezer]

Usury is not illegal. 1% or 2000% are both usery. Excessive rates are also legal as long as the rules are followed, ie the rate is made clear up front. What is illegal is lending outside the rules and without a credit licence, there is no limit on rates of interest.

[123everton]

Geezer's right, we are one of the few countries that does not impose set limits on interest.
It's almost obscene that loan sharks can offer better rates than square mile city execs, they both belong in jail.

[another-view]

The rate is made perfectly clear on the advert. Nothing illegal about it.

[hc4361]

These high interest loan companies are offering small loans over short periods to the needy untrustworthy who cannot get low interest loans because of their very poor credit rating.
I'd charge them a high rate too.

[123everton]

I don't think anyone's questioning it's legality, rather it's legitimacy.
These sort of rates are illegal in France.

[buildersmate]

So what do they do for the needy but untrustworthy in France, I wonder?

[123everton]

Enforce a lower rate of interest I presume.

[Sandy-Wroe]

People with poor credit ratings should consider joining a Credit Union Their interest rates are very low.

[claybizz]

Many thanks for your interest and information.

[ABerrant]

"Enforce a lower rate of interest I presume."

The presumption is incorrect. High risk cases are unable to borrow from regulated institutions.

Rate-capping in France and Germany has resulted in legitimate lenders not catering for the large section of potential borrowers who need to borrow less than the minimum loan amount that the capped rate makes financially viable for the lender to offer (often around €1500) and who do not qualify for this higher loan amount because of their risk status. This is why the incidence of illegal lending in Germany is 2.5 times higher, and that in France is 3 times higher, than in the UK. Enforcement by illegal lenders may involve the use of a baseball bat.