Usury: what it is, how it is valued and what legal repercussions it has

The economic crisis, the rise in interest rates, unemployment and the economic difficulties to meet the installments of the loans acquired make many indebted families think that they may be bearing an exorbitant financial burden for their current possibilities.

Faced with this burden, the debts contracted are analyzed in great detail and it is observed in some cases that these debts are directly indicated by a usury legal concept . But to analyze this concept we will have to explain what usury is , how it is valued and what legal repercussions it has.

Usury: what it is, how it is valued and what legal repercussions it has

What is usury?

Normally we commonly associate usury as "excessive interest on a loan." Currently there is a law that regulates the aspects of usury, the Azcárate Law, of July 23, 1908, on the repression of usury.

Among other conducts, "any loan agreement that stipulates an interest significantly higher than the current value of money is sanctioned for usury."

In Spain, there is no official usury rate from which all interest is declared usurious.

The Azcárate Law of July 23, 1908 distinguishes three categories for the existence of usury :

1) When an interest significantly higher than the normal value of money is stipulated, manifestly disproportionate to the circumstances of the case.

2) When the interest is leonine, because there are reasons to believe that it has been accepted by the borrower because of his distressing situation, his inexperience or the limited mental faculties.

3) When it is assumed that a greater quantity has been received than that actually delivered, and due to the mere fact of the discrepancy between these two quantities.

Is usury a crime?

In Spain usury is not a crime . It was decriminalized by the Penal Code of 1995, breaking the penalizing criteria set out by the Penal Code of 1928.

A declaration of usury entails the nullity of the contract, the borrower is obliged to deliver only the amount received. If he has already paid part of the amount received and the interest due, the lender must return to the borrower what exceeds the capital borrowed.

In matters of usury, the courts decide in each case freely forming their conviction (as provided in article 19.4 of the Consumer Credit Law).

This is the criterion followed by many Provincial Courts. Given the absence in the Azcárate Law of a rate that automatically determines the existence of usury, the consumer credit law “would be giving us a legal and useful reference for practical purposes depending on whether the credits are more or less away from those 2, 5 times".

Can a credit granted to a company be declared as usury?

The Azcárate Law does not limit protection exclusively to private consumers, it is a protection measure for the entire financial market, which protects the interests of those who contract bank loans , whether they are consumers or not.

What operations can be declared as usury?

The usury sanction applies to any operation equivalent to a money loan , whatever the form of the contract and the guarantee that has been offered for its fulfillment.

A credit line, a discount or any credit operation in which the interest is disproportionate may be sanctioned for usury.

Any usurer who has had three or more loan contracts canceled will be imposed as a disciplinary correction in the form of a fine, depending on the severity of the abuse and the degree of recidivism .

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