What illegal practice involves lending money at unreasonably high rates?
Correct Answer
B) Usury
Usury is the precise legal term for the practice of lending money at interest rates that exceed the legally permitted maximum, making it the correct answer to this question. In California, the general usury limit under Article XV of the California Constitution is 10% per year for non-exempt lenders, and charging above this rate constitutes a criminal violation as well as rendering the loan contract potentially void or voidable. Usury laws protect borrowers — particularly in real estate transactions involving private or hard money financing — from being charged exploitative rates that make loan repayment impossible.
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