Word of the Month for June 2016: Usury

One of the reasons I went to law school was I was tired of seeing little people get beat-up.  OK, OK, I'm not completely all altruistic - I also saw it as a way to make a ton of money.  While it didn't work out that way, I'm still an advocate for the little guy.

For example, the other day, a young-ish lady came into the library.  Seems she had taken a loan for $5,000 for 80 months at the rate of 150%.  You heard right - one hundred and fifty percent interest on a $5,000 unsecured loan for 80 months.  Paid out over the entire 80 months, lady will have paid (on the initial loan of $5,000) about $630,000.  YIKES!

Of course, this all brings us to our word of the month: USURY.  Blacks Law Dictionary notes that:

historically, usury was the lending of money with interest. Today, it is the charging of an illegal rate of interest as a condition to lending money; an illegally high rate of interest

In lady's case, lady is looking at a couple of things.  First is this a "usurious" amount of interest?  It depends on the State you live in.  In California, for example, the maximum interest that can be charged is 10% - unless....you're dealing with California Financial Code section 22250 which exempts certain personal property loans of $5,000 or more from the 10% maximum rate. 

Uh huh.  While lady's loan may not be usurious, it might still be classified as unconscionable.  Black's Law Dictionary defines UNCONSCIONABLE as:

Having no conscience; affronting the sense of justice, decency, or reasonableness.  Shockingly unjust or unfair.

Certainly 150% is a shocking amount of interest to be charged. The problem here is that any adult is free to contract for anything.  As long as lady is aware of the consequences and lender didn't try to slip something funny past lady when she signed the contract, lady may (there's that word, again) be stuck.

In any event, as the dutiful law librarian that I am, I suggested lady take a gander at:

• Miche on Banks and Banking (Lexis)
• The Law of Bank Deposits, Collections and Credit Cards (Lexis)
• Consumer Banking and Payment Law (NCLC)
• Truth in Lending (ABA)
• Williston on Contracts (Thomson Reuters)

Yep, there are never any easy answers when it comes to law and legal stuff.  Good thing your local county law library is right around the corner to help you find what all you're looking for.