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Vincent2013
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Under the definition of usury,when was the last time that there

Customer Question

Under the definition of usury,when was the last time that there was a legal limit on interest payments in England and what was the limit. I seem to remember that usury was described as interest over 48%.
Submitted: 3 years ago.
Category: Law
Expert:  Vincent2013 replied 3 years ago.

Hi, thanks for your question. My name's XXXXX XXXXX I'm going to help you with it.

 

Usury laws in the UK were repealed in stages between 1833 and 1854. By 1854. the prevailing cap on interest rates was 5%, having been brought down progressively from 12% to 8% and then 6%.

 

Having said this, the concept of usury did make a re-apprearance (albeit in an indirect form) in the Consumer Credit Act 1974. Until 2007, the English courts were empowered under the 1974 Act to revisit a loan if it was deemed to be "extortionate" and, in determining this, the court could consider the interest rates prevailing at the time the bargain was made. Although this power was rarely deployed, in 2004 a rate of 39.4% was held to render a loan "extortionate".

 

The Consumer Credit Act 2006 has now replaced parts of the 1974 Act and, under the current law, the courts have the power to revisit credit agreements if an agreement creates an "unfair relationship". However, unlike the 1974 Act, this test does not expressly refer to interest rates. The OFT's view is that there is scope for the court to find that a credit relationship unfair on the grounds of the borrower's costs but precisely what rate of interest might cross the threshold is unclear due to the limited case law.

 

I hope that's helpful but please don't hesitate to let me know if you require any clarification. If I've been useful, please also don't forget to rate my answer, as it's an important part of our process and is the only way I can obtain credit for my work.

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