Eli obtains a consumer loan from First State Bank at an interest rate that exceeds the state's maximum. First State has
A) calculated the optimum rate that the market will bear.
B) engaged in a restraint of trade.
C) underestimated the risk of the loan's nonpayment.
D) violated the usury laws.

Question

Eli obtains a consumer loan from First State Bank at an interest rate that exceeds the state's maximum. First State has
A) calculated the optimum rate that the market will bear. 
B) engaged in a restraint of trade.
C) underestimated the risk of the loan's nonpayment.
D) violated the usury laws.

Quizplus · Accepted Answer

First State Bank has violated the usury laws by charging an interest rate that is higher than the state's maximum allowed rate. Usury laws set a limit on the amount of interest that lenders can charge on loans. This is to protect consumers from being charged excessive interest rates and falling into debt traps.

Eli Obtains a Consumer Loan from First State Bank at an Interest