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What is Usury

The much used term of usury in the industry of loan is being derived from the Medieval Latin term usuria, which can be translated to mean interest. The Latin term usura can also be said to be the main source from which the term usury has been derived. And the Latin term actually means charging of any kind of interest on the loans provided to the borrower. Money was being charged for any type of utilization of money and this is what the term usury meant. During the past days when the concept of interest became an accepted norm, the term of usury came to be known as the interest being charged above the rate and which was being allowed by the law. But in the contemporary world the term usury actually came to be known as the unfair as well as the high rates of interest that is being charged over the money that is lend out by the lender.

The time when money is being lent, it is lent not only for acquiring the main amount of money all over again. But in such a case the compensation for using the money, in the form of interest is also being obtained. Those people who regard it as a lawful thing, term it as interest. On the other hand, those people who does not consider it to be a lawful thing, term it as usury. In the United States of America, the laws relating to usury are the state laws. It is the maximum form of legal rate of interest that is being given for the loans taken. Though the US Congress has the power to regulate the rate of interest on those transactions that are purely private in nature, but it has not done so. In the Unites States if violence or any kind of threat is being used in order to collect the rate of interest relating to usury, then it is considered to be an offense according to the federal law of the country.

The kind of activities that are being related to usury is so unscrupulous that the term is also known as loan sharking. The term of usury is also being used for those types of usury lending processes that are non-compulsive in nature. At times the term usury is also being used for the procedure of production of consumer loans without any kind of license in control which would also require other type of licenses.

In regard to the defense of usury it is being argued in welfare economics that it is essential for charging such type of interest. This is because it would help to guide the entire process of investment. Such a kind of argument is based on the assertion that there is a need of profit so that investments could be directed to be used in a productive manner. The high rate of interests that are being charged in relation to usury is being said to reflect the fact that it is being issued to the creditors with a known risk. The lenders while issuing usury on such high rates of interest knows it very well that the creditors would not be able to return back the loans on time.

Tags: credit, Economics, law, Legal, loan, money, risk

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