The usurious loan and the penalties for exceeding the thresholds of the usury rate
The legislator has set a usury rate to protect consumers and save them from having their credit contracts contain excessive interest rates.
In the general sense of the term, the concept of usury consists in applying an interest rate higher than that authorized by the regulations in force.
Thus, the usury rate corresponds to the maximum legal rate that banks must respect when granting credit.
In this respect, article L314-6 of the Consumer Code provides that:
“Constitutes a loan shark, any conventional loan granted at an overall effective rate which exceeds, at the time it is granted, by more than a third, the average effective rate practiced during the previous quarter by credit institutions and financing companies for operations of the same nature entailing similar risks.”
The annual percentage rate of charge ( APR), formerly TEG, is the maximum interest rate set by banks and credit institutions as part of their loan agreement.
Concretely, it is the cost of credit.
In practice, this rate serves as a reference to determine whether the interest rate of the credit agreement exceeds the usurious threshold.
Wear rates, therefore, play a regulating role.
Each quarter, the Banque de France calculates the usury rates or thresholds.
The Banque de France collects from a large sample of credit institutions and financing companies the average effective rates charged for the different categories of loans for which the usury thresholds are calculated.
Increased by a third, these rates establish the corresponding wear and tear thresholds.
The wear and tear thresholds are published in a notice in the Official Journal at the end of each quarter for the next quarter.
The average effective rates applied by credit institutions during the fourth quarter of 2017 for the various categories of credits and corresponding usury thresholds applicable from January 1, 2018, are published by notice in the Official Journal later than the last day of the term. (It should be remembered that only the publication in the OJ is authentic).
For consumer credit contracts, the wear rate, as of January 1, 2018, is:
- 20.88% for loans of less than or equal to €3,000
- 12.87% for loans of an amount greater than and less than or equal to €3,000
- 5.85% for loans over €6,000
For credit agreements intended to finance buildings for residential use or professional and residential use, the expenses relating to their repair, improvement, or maintenance, the wear rate, on January 1, 2018, is:
- 3.09% for fixed-rate loans with a duration of fewer than ten years
- 3.11% for loans with a time between 10 years and less than 20 years
- 3.36% for loans with a term of 20 years or more
- 2.83% for variable-rate loans
- 3.35% for bridge loans
For credit agreements granted to natural persons acting for their professional needs and to legal persons having an industrial, commercial, craft, agricultural, or non-commercial professional activity, the wear rate, as of January 1, 2018, is:
- 14.04% for account overdrafts
For credit agreements granted to legal persons with no industrial, commercial, craft, agricultural or non-commercial professional activity, the rate of wear, as of January 1, 2018, is:
- 5.31% for loans granted for purchases or installment sales
- 2.12% for loans with an initial duration of more than two years, at variable rates
- 2.36% for loans with an initial period of more than two years, at a fixed rate
- 14.04% for account overdrafts
- 2.13% for other loans with an initial term less than or equal to two years
Any lender exceeding this limit exposes himself to legal proceedings.
The punishable persons are punished by all those who consent to an agreement or a usurious credit operation and all those who knowingly participate in granting or obtaining such credit.
On the penal level, article L341-50 of the Consumer Code provides that any person who consents to a loan shark or participates in it directly or indirectly, or whose assistance would make the loan usurious, incurs a penalty of imprisonment for two years and a fine of 300,000 euros.
On the civilian level, the loan is not null and void. The sanction of usury consists of the reduction of interest collected at the maximum authorized rate.