Usury and the Law
"When money is lent on a contract to receive not only the principal sum again, but also an increase by way of compensation for the use, the increase is called interest by those who think it lawful, and usury by those who do not"; this is how the author chooses to put it in Blackstone's Commentaries on the Laws of England .
In the United States of America, the usury laws are state laws that specify the maximum legal interest rate at which loans can be allotted. The Congress has opted not to regulate interest rates on purely private transactions, though it has the imminent power to do so under the interstate commerce clause of Article I of the Constitution. The Congress has also opted to put a federal criminal limit on interest rates by the Racketeer Influenced and Corrupt Organizations Act definitions of 'unlawful debt', which make it a federal felony to lend money at an interest rate more than two times the local state usury rate and then try to collect that to be an example of unlawful debt. It is a federal offense to use violence or threats to collect usurious interest or any other sort of repayments. Such activity is referred to as loan sharking, though that term is also applied to non-coercive usurious lending, or even to the practice of making consumer loans without a license in jurisdictions that require licenses to be available with the lender.
Usury rates in the United States of America
In the United States of America, there exist statutes which set out the exact amounts of interest that can be charged before it becomes unlawful or usurious. If a lender charges above the lawful interest rate, the court will not allow him to sue you to recover the debt, because his interest rate was illegal anyway. Also in some states like New York, such loans are avoided, that is, they are made void from the beginning or ab initio to deal with this menace.