What does usury refer to in lending?

Usury specifically refers to the practice of lending money at excessively high and often illegal interest rates. In many jurisdictions, there are laws that set maximum interest rates to protect borrowers from predatory lending practices. When lenders charge above these legal limits, they are engaging in usury, which is considered unfair and exploitative.

Understanding usury is important because it helps to highlight the ethical considerations in lending practices as well as the legal ramifications for lenders who engage in such behavior. This concept plays a significant role in the regulatory framework governing financial transactions, ensuring that consumers are protected from potential abuses.