What is usury?

Usury is a banking law that governs the interest rate charged on a loan. In Delaware, usury laws limit the amount of interest that can be charged on any loan. The maximum interest rate is fixed by law and is the same for all lenders. Usury laws are designed to protect consumers from predatory lending practices, such as charging unreasonable interest rates, that could lead to unfair amounts of debt. Usury laws vary from state to state. In Delaware, the maximum rate is 6% on consumer loans, and 8% on commercial loans. This rate applies to interest, fees, and other costs on the loan and is calculated on the unpaid principal amount. If the loan contract stipulates a higher interest rate, it is considered usurious and the lender is not allowed to collect on the loan. Usury laws also protect borrowers from unfairly high interest rates and fees, which can lead to significant additional costs. Borrowers should review all loan documents carefully to ensure that the interest rate charged does not exceed the legally allowed rate.

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