HOW TO KNOW IF MY LOAN HAS LOAN SHARKS MADRID

Usury consists of charging very high interest on a loan or any operation equivalent to a loan of money.

In this case, we speak of usurious interests. The concept is closely related to abusive interests, although different.

The term  “usurious interest”  applies to remunerative interest, which is the price that must be paid for receiving money on a loan.

However,  the term abusive interest is applied to default or default interest, which is the compensation paid by the debtor to the creditor for non-payment of a debt.

In the legal field, usury does not only refer to excessive and disproportionate interest but, in general, to the exorbitant price of the loan.

REGULATION OF USURY

It is regulated in the Usury Repression Law of July 23, 1908,  known as the Azcárate Law.

The aforementioned Law, despite its antiquity, is today in full swing.

In the years of crisis, there have been many contracted loan operations that can be classified as usurious.

The Azcárate law does not establish a clear limit that determines when interest is usurious or not. It is the Courts of Justice that have been ruling on the scope of application of the Usury Law:

According to the Usury Law:

Any loan contract that stipulates an interest notably higher than normal for money and manifestly disproportionate to the circumstances of the case or in such conditions that the leonine one results, having reasons to estimate that it has been accepted by the borrower due to his or her interest, will be null. the distressing situation, their inexperience, or their limited mental faculties.

Article 1 of the Usury Law

WHAT IS INTEREST IN A LOAN?

The interest on a loan is the price that must be paid to the loan shark for the money that we receive as a loan. That is the price of borrowed money.

This interest is called remunerative interest.

There are two  main reasons  why loan sharks charge interest on loans granted:

• To obtain a benefit in exchange for parting with part of your capital (borrowed money).
• To compensate for the possibility of non-payment by the borrower (the one who receives the loan).

WHAT IS THE NORMAL INTEREST IN MONEY?

The normal interest of money is the normal or habitual interest in consumer credit operations. The normal interest on money is published by the Bank of Spain.

To establish what is considered “normal interest” you can go to the  statistics published by the Bank of Spain, based on the information that credit institutions have to provide monthly on the interest rates that apply to various types of active operations and liabilities  (credits and personal loans up to one year and up to three years, checking accounts, savings accounts, reports, etc.)

IS THE SAME NORMAL INTEREST OF MONEY AND LEGAL INTEREST OF MONEY?

No.  It is important not to confuse the “normal interest of money” with the “legal interest of money”.

• The first,  “normal money interest ”, is taken into account to determine whether the remunerative interest on a loan or credit is excessive or disproportionate. That is if there is usury.
• The  “legal interest on the money”  is the legal percentage established in the General State Budgets. This interest rate is used to determine the default interest that the borrower must pay in the event of non-payment or late payment of the loan (default interest).

WHAT IS A USURIOUS INTEREST?

In principle, the interest of the loans or credits will be those freely set by the loan shark with the clients.

However, the law prohibits the setting of grossly disproportionate and excessive interest.

To know if the remunerative interest is disproportionate or excessive, it should be compared with the normal interest on money, to which we have previously referred (not to be confused with the legal interest on money).

In addition, to determine if there is usury in contracting the loan, the circumstances of each specific case and the freedom of agreement will be taken into account.

If you think that, in your case, there has been usury in contracting your loan or credit, write to us now and we will solve your doubts.