what is Usury Act of 1926
The Usury Act of 1926, also known as the Usury Law, was a piece of legislation enacted in the United Kingdom. It aimed to protect borrowers from high interest rates charged by lenders.
Under the Usury Act, the maximum legal interest rate that lenders could charge for loans was set at 7%, both in written agreements and verbal loans. Any interest rate exceeding this limit was considered usurious and illegal.
The Act also introduced penalties for lenders who violated the interest rate cap. If found guilty of charging excessive interest rates, lenders could face fines, imprisonment, or both.
The Usury Act of 1926 was intended to provide consumer protection in lending and prevent borrowers from falling into heavy debt due to exorbitant interest rates. While it was in effect, it regulated lending practices and aimed to ensure fair treatment for borrowers in the UK.
The Usury Act of 1926, also known as the Moneylenders Act of 1926, was a piece of legislation enacted by the Parliament of the United Kingdom. It aimed to regulate the activities of moneylenders and prevent unfair lending practices and excessive interest rates.
Here are the main provisions of the Usury Act of 1926:
1. Licensing of Moneylenders: The act required individuals or businesses engaging in moneylending to obtain a license from the local authority. This allowed regulatory authorities to keep track of moneylenders and ensure they operated within legal boundaries.
2. Interest Rate Limitations: The act set maximum interest rates that moneylenders could charge their borrowers. The specific limit varied depending on whether the loan was secured or unsecured. For example, the maximum interest rate for secured loans was set at 8%, while for unsecured loans, it was 48%.
3. Restrictions on Charges: The act also regulated the fees and charges associated with money lending. It prohibited excessive and unfair charges, ensuring that borrowers were not subjected to additional fees beyond the agreed interest rate.
4. Disclosure Requirements: Moneylenders were required to provide borrowers with clear and detailed information about the terms and conditions of the loan, including the interest rate, charges, repayment schedule, and any associated fees. This helped ensure transparency in lending practices.
5. Penalties for Non-Compliance: The act included penalties for moneylenders who violated its provisions. These penalties could include fines, imprisonment, or revocation of the moneylender's license.
The Usury Act of 1926 aimed to protect borrowers from exploitative lending practices, promote fair lending, and regulate the moneylending industry. Over time, newer legislation has been introduced in many countries to further regulate lending practices and address changing financial landscapes.