Usury Law Compliance Agreement
A Usury Law Compliance Agreement is a legal document that outlines the terms and conditions under which a lender agrees to operate within the limits established by usury laws. These laws are designed to protect borrowers from excessively high interest rates on loans, setting maximum allowable rates that lenders can charge.
Usury laws vary by jurisdiction, which means that the maximum interest rate allowed can differ significantly between states or countries. A Usury Law Compliance Agreement ensures that lenders adhere to these regulations, mitigating the risk of legal disputes that could arise from charging illegal interest rates.
Typically, the agreement will include the following components:
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Interest Rate Disclosure: A clear statement of the interest rate charged on the loan, confirming that it does not exceed the legal limits.
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Loan Terms: Details regarding the principal amount, repayment schedule, and any fees associated with the loan.
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Compliance Assurance: A clause affirming the lender’s commitment to comply with applicable usury laws, protecting both the lender and borrower from the consequences of non-compliance.
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Remedies for Breach: Stipulations outlining the actions that can be taken if either party fails to adhere to the agreement or usury laws.
For example, if a lender enters into a Usury Law Compliance Agreement with a borrower in a state where the maximum allowable interest rate is 15%, the agreement will explicitly state that the interest charged will not exceed that rate, thereby ensuring legal compliance and protecting both parties’ interests.
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