Charging a rate of interest in excess of the maximum rate allowed by law is known as

Usury is the legal term that refers to the practice of charging an interest rate on a loan that exceeds the maximum rate allowed by law. Each jurisdiction has specific laws that determine what constitutes a legal interest rate, and exceeding this rate is considered usurious behavior.

The concept is designed to protect borrowers from predatory lending practices, ensuring that lenders do not take advantage of individuals by imposing exorbitant interest charges. It is important for both lenders and borrowers to be aware of these regulations to avoid legal repercussions.

Understanding usury is vital for sales professionals and lenders because it governs the ethical practices within the lending industry. Recognizing what constitutes unlawful interest rates helps in maintaining compliance with financial regulations and in building trust with clients.