How do states calculate usury?

Does every state use the same method? Are usury rates the same in every state?

Usury is determined at a state level, so calculations can vary. Since the federal government is not involved, every state has the ability to set their own usury amount. A majority of states have usury rates around 10%, although exemptions, fine print, and other issues may effectively negate this rate.
The methods used to calculate usury will vary as well. Some states have a legal limit that is set, while others use a yearly or quarterly calculation. As usury is meant to reduce predatory lending practices, a set rate is to provide a guideline for lenders.
In most cases, lenders themselves will have their own method for calculating interest and the interests they charge. A large majority of lenders still use the 365/360 method for interest, which differentiates between the interest rate and the APR for a mortgage or a car loan.
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Emily Maracle
Answered on Jul 30, 2021
Emily Maracle is a car insurance specialist living in New York. Originally from the Pacific Northwest, she has a degree in English Literature and a background in customer service. She enjoys cooking, gardening, and living sustainably. In the future, she can't wait to upgrade to a hybrid or electric car.

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