What is wear rate

The usury rate is an excessively high interest rate and for this reason, according to the law, it is considered illegal.
And if with the term "usury" one commonly imagines a criminal scenario, in which the usurer grants illicit money loans to people with serious economic difficulties, in reality one will be surprised to discover that on a legal level usury can be applied in much broader contexts, such as financing or loans granted by credit institutions and banks.
In fact, as is now well known, an interest rate is expected to be applied when signing a mortgage, loan or financing contract.
If this, however, exceeds the maximum limit indicated by the Ministry of Economy and Treasury, it is considered usurious and for this reason we can legitimately speak of a usury rate.
Beyond the loss of trust in one's credit institution, it is natural to ask oneself how a customer can act to protect himself in the face of similar misconduct.
But even before answering this question, we need to ask ourselves: what is a wear rate and how can we recognize it? How can you find out if your bank has applied a usurious rate to the loan you have been granted? To dispel any doubts, below is a guide on the usurious interest rate.
read also Transfer of credit, unblocking is active with the intervention of the Regions What is the usury rate? The usury rate is an interest rate that exceeds the limit permitted by law: the TEGM or the average global effective rate which is established quarterly by the Ministry of Economy and Finance (MEF).
In fact, "usury" means the crime committed in lending money at interest rates that are illegal because they are too high, so much so as to put the person who signed the contract in difficulty in repaying the loan.
When stipulating a contract for a mortgage, for a loan or for an economic loan, therefore, attention must be paid to the interest rate applied, as it must not reach the threshold of the usurious rate – above which the rate is illegal .
How to recognize a usurious interest rate But how can we recognize a usurious interest rate and above all how is it calculated? As anticipated, the interest rate becomes usurious when it exceeds the TEGM by a quarter (i.e.
25%) with an additional margin of +4%, as established by the Treasury Department on 18 May 2011.
Let's see a practical example that help to understand: If the TEGM is 5%, we calculate the Wear Rate Threshold: TEGM + (25% of the TEGM) + 4%= 5% +( 1/4 • 5%) + 4% = 5% + 1 .25%+ 4%= 6.25% + 4% = 10.25% Above 10.25% this rate is considered usury.
Fortunately, this calculation is carried out every three months by the Bank of Italy on behalf of the Minister of Economy and Finance, which has the task not only of identifying the TEGM but also the usurious rate threshold.
Therefore, the compiled TEGM tables are published quarterly in the Official Journal, on the websites of the Bank of Italy and the Ministry of Economy and Finance.
Before signing a contract it is therefore a good idea to consult the tables in the Gazzetta in order to protect yourself from the possible trap of the usurious rate.
The tables, with the TEGM values for the current quarter, are easy to read and first of all show the start and end date of the quarter, i.e.
the period of validity of the global average effective rate and, then, in the table from left to right: The category of operation to which the TEGM refers; The amount class, i.e.
the money threshold within which the operation falls, to which the corresponding average rate and threshold rate apply; The average rate indicating the TEGM established by the quarterly ministerial decrees; The threshold rate above which the rate applied is to be considered a usury rate pursuant to art.
2 of Law no.
108 of 1996.
In order to be clear on how to read the table just described, we give an example by reporting the first two entries of the compiled tables of the TEGM of the last quarter of 2023: Usury rates fourth quarter of 2023 Period of application from 1 October to 31 December 2023 Categories of operations classes of amounts in euro average rate % on an annual basis threshold rate % Opening of credit in current account up to 5,000 11.35 18.1875 Opening of credit in current account over 5,000 10.17 16.7125 read also Tax residency 2024, what is it and all the upcoming news Who has a loan shark rate? The usury rate, unlike what you might think, can also be applied in the banking sector.
In fact, when faced with the law, credit institutions and banks can be potential loan sharks.
Therefore a large category of customers may be at risk of a usurious rate.
In order to protect customers, the MEF has indicated various financial operations where an illicit application of the usurious rate could occur, such as: Credit openings in current accounts; Financing for businesses, such as advances on credit and commercial discounts; Personal loans to families from banks; Fixed rate mortgage loans; Adjustable rate mortgage loans; Factoring; Leasing; Loans against salary-backed loans; Hire purchase financing; Revolving credit.
In this way people can understand if they fall into the risk categories and to understand if they have fallen victim to the usury rate, simply compare the interest rate quoted by their credit institution with the TEGM tables.
If you want to prevent risk, however, simply compare different quotes, paying attention to interest rates.
What to do in case of usury rate If you realize that you have fallen into the usury rate trap, since it is illegal, you can proceed through legal proceedings, the costs of which will however be borne by the victim.
The customer who finds himself a victim of the usurious rate can take legal action against the bank (or credit institution) with which he stipulated the financing contract, but only if 10 years have not passed since the repayment of the loan or the closing of the current account.
The laws on the rate of usury Once the customer has decided to take legal action, what are the risks faced by the bank and what are the consequences? To answer you need to go to the Civil Code and the Penal Code.
The rate of usury, in fact, is considered by the legislator to be a crime against property and is sanctioned by both the civil and criminal code with a fine, imprisonment and confiscation of the assets resulting from usury.
Let's investigate what the laws on the usury rate provide in detail: Article 1284, paragraph 2 of the Civil Code, in matters relating to mortgages, establishes that if it has been ascertained that a usurious interest rate has been applied "the clause is void and – therefore – interest is due only to the legal extent".
This means that the customer of the banking institution – the injured party as he found himself in difficulty in repaying the loan due to the high interest rates – no longer has to repay the interest, but must undertake to guarantee only the repayment of the capital obtained borrowed.
Article 644 of the Penal Code, i.e.
the law on usury, also provides for imprisonment from 2 to 10 years and a fine of between 5,000 – 30,000 euros as a penalty against those who apply usurious interest rates.
Furthermore, the article distinguishes between "presumed or objective" usury which actually exceeds the threshold established by law; and "concrete or subjective" usury which does not exceed the threshold but sees an abuse by those who grant the financing of the victim's state of economic difficulty "as an instrument of undue profit through the disproportion of benefits".

Author: Hermes A.I.

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