The crisis has revived usurious practices and you may be the victim of abusive interests or know someone who is suffering from them. If that’s the case, don’t worry. Lawyers have dusted off the loan shark Suppression Act of 1908 to rid you of those unfair loans.
We tell you what a loan shark consists of and how you can get rid of a usurious loan. In addition, we have a directory of lawyers specializing in civil law, which you can check without obligation.
What is a loan shark?
Loan shark refers to the interest charged on a loan when it is so high that it becomes unfair. The practice of loan sharks has been frowned upon in all cultures and times because it is considered immoral for the lender to enrich himself by exceeding the collection of the needy.
For example, the Christian Church allowed the loan of money but refused to charge interest. Hence the term ” loan shark”, which was criticized in the same way from Islam and Judaism. Depending on the time and place, this sanction has been legal or merely moral.
Also in ancient India, these practices were despised and classical philosophers (both Greek and Roman) did not hesitate to condemn loan sharks.
So much so that Julius Caesar imposed a maximum interest rate that Justinian ended up lower. Charlemagne declared loan shark a crime, and Clement V annulled all the legislation in favor of it.
THE LEGAL PERSPECTIVE
It should be noted that in the legal field, a loan shark not only refers to abusive interests but, in general, to the exorbitant price of the loan. And it is that the prohibition of a loan shark is a measure of social justice, so it does not matter which concept introduces disproportion in the contract.
In short, it has always been understood that this practice entailed a certain injustice, a reason that has motivated the law to deprive it of its virtuality. In the Spanish case, this limitation of the effectiveness of the interests had an entry with the Law of Azcárate (or Law of loan shark) of 1908.
THE LOAN SHARK ACT OF 1908
This law from the early twentieth century is still in force today. It consists of sixteen articles, four of them now repealed. Its effect entails the nullity of any loan:
«In which an interest significantly higher than the normal amount of money is stipulated and manifestly disproportionate to the circumstances of the case or in such conditions that it turns out to be leonine, having reasons to consider that it has been accepted by the borrow because of his distressing situation , of his inexperience or of the limited of his mental faculties ».
This law also prohibits the pretense of having delivered an amount greater than that loaned to a camouflage loan shark.
When a loan is considered usurious, the law determines its nullity. And when declared void as a result of this law, the debtor must only return the amount borrowed (without interest.
AZCÁRATE’S LAW TODAY
The law of repression of loan sharks not only continues in force, but it has become very current as a result of the crisis and bad banking practices. Therefore, in recent days we see how the Courts annual loans and credit cards are given their disproportionate conditions.
The problem is that the “manifestly disproportionate” and the “leonine” are magnitudes that the Judge must appreciate in each case. For this reason, jurisprudence has been shaping certain criteria that provide some legal certainty.
WHAT IS CONSIDERED A LOAN SHARK
The courts or tribunals must determine in each case whether the loan is usurious or not. These appraisals have gradually established a jurisprudence whose general features we offer below.
UNIT OF THE LEGAL REGIME OF LOAN SHARK
The Supreme Court warned in the FJº 3º of its STS No. 406/2012, of June 18, that the Azcárate law must be applied following criteria of unity and systematization. By this, he means that there are no “types” of a loan shark and that determining the usurious nature of a loan depends on a joint analysis of the circumstances involved :
“Although the notion of loan shark refers etymologically to the plane of interests, control is projected on the business relationship considered in its contractual unit.”
For this reason, the usurious loan is punished with nullity, which is spread to the accessory guarantees and related businesses.
COMPUTABLE AMOUNTS
As a consequence of this principle of unity, the loan shark is determined according to the APR applied to the loan. And it is that the equivalent annual rate includes all the payments that the borrower makes to the lender. In the words of STS No. 628/2015, of November 25 :
“The percentage to be taken into consideration is the equivalent annual because of ch is calculated taking into account any payments that the borrower has to make to the lender by reason of the loan”.
It must be taken into account that remuneration and late payment interests can be understood as illegitimate, but also other conditions. For example, receiving an amount less than the nominal amount or charging the loan with expenses and commissions that hide its usurious nature.
SIGNIFICANTLY HIGHER INTEREST AND MANIFESTLY DISPROPORTIONATE
The Supreme Court has been understanding that the “normal money interest” is the one that is applied in similar loans at that time, according to the statistics of the Bank of Spain. And understand that it is manifestly disproportionate when you double these rates.
Both characteristics must occur simultaneously for the loan shark to be considered.
In addition, the order understands that the risk of insolvency legitimizes the credit institution to demand higher interests. However, it is the lender who must justify the departure from the usual APR in the sector. In the words of the aforementioned STS No. 628/2015, of November 25:
«Normality does not require proof, whereas it is the exceptionality that needs to be alleged and proven. The financial institution has not justified the concurrence of exceptional circumstances that explain the stipulation of a notably higher interest than normal in consumer credit operations ”.
In short, it has been understood as a “notably superior and manifestly disproportionate interest” that, without being justified, doubles the APR used in the sector at all times. As examples, the following Supreme Court Judgments:
406/2012: interest of 24.2725% APR was applied.
677/2014: 30% interest (TIN) was applied
628/2015: interest of 24.6% APR was applied.
INCOMPATIBILITY WITH CONSUMER PROTECTION
STS No. 677/2014, of December 2, recalled that the application of the loan shark compatible with consumer protection regulations :
“Although the parties may initially claim these regulations in order to their possible application to the specific case, nevertheless, their joint integrated application is incompatible as they are causal controls of different configuration and scope, with their own scopes of application and differentiated ”.
And this is because the first regulates a very specific assumption to avoid immoral loans, which sanctions with nullity.
Faced with this, the second only addresses the imbalance of powers between contracting parties, without making a moral assessment. In addition, it only cancels the abusive clause, persisting the rest of the contract.
On the other hand, while the first law reproves certain business practices, the second orders a non-negotiated sector of traffic (serial contracting).
Consequently, if you need to claim a usurious credit, your lawyer must choose his procedural strategy with great caution, and/or carry out an adequate escalation of subsidiary requests.
CREDIT CARDS
It is no coincidence that one of the most common uses for the loan shark Law is the cancellation of credit cards with abusive conditions. In this sense, the so-called revolving stands out, whose regime is included in article 9 of the law for the repression of loan sharks:
” The provisions of this law shall apply to any operation substantially equivalent to a money loan, whatever the form of the contract and the guarantee that has been offered for its fulfillment.”
PRESCRIPTION OF THE ACTION
The Supreme Court established doctrine in its STS No. 539/2009, of July 14. In such resolution it determined the imprescriptible nature of the nullity action derived from the Azcárate law :
«The nullity of the usurious loan, clearly established by article 1 of the Law of July 23, 1908, implies an ineffectiveness of the business that is radical, absolute and original, that does not admit confirmatory validation, because it is fatally unhealthy, nor is it susceptible of extinctive prescription ».
HOW TO DEVELOP AN ACTION FOR ANNULMENT FOR LOAN SHARK
Recently, ASUFIN announced that a Wizink credit card had been declared invalid for maintaining an APR of 26.70%. The contract was formalized in 2013 when the average APR was 9.461%.
The matter was settled by the Court of First Instance No. 3 of Gijón.
On April 12, 2018, the lawsuit had entered the court, being admitted for processing four days later and answered by Wizink on May 21.
After this first month, the parties were summoned to hold the preliminary hearing on July 9, 2018. In it, the pertinent evidence was provided and the order was seen for the Sentence.
On July 12, 2018, the court issued an estimate declaring the nullity of the card contract and ordering the restitution of what was delivered.
Therefore, an action for annulment for a loan shark can take about four months to be resolved, depending on the burden of each court.
Of course, the proceeding remedies remain safe, although the current jurisprudence is quite clear about the loan shark.
If the lawyer is skilled, he will get his client free to pay interest, expenses, and commissions, returning only the nominal amount and, where appropriate, recovering the excess that he has already paid.
CONCLUSION: THE IMPORTANCE OF GOOD ADVICE
Except for the more technical questions, we have tried to teach you how a good lawyer can rid you of a usurious credit. And it is that the antisocial character of this practice entails its prohibition and therefore its insurmountable nullity.
Indeed, a loan that involves a loan shark may also be approached from other procedural perspectives. That is why the lawyer in charge of your advice and defense must be a specialist in usury.
If you need to delve into these concepts or obtain recommendations from a specialist, do not hesitate to take advantage of LexGoapp services. The best way to defend your rights is to be well advised from the beginning.
