What is the illegal practice of charging exorbitant interest rates on a loan called?

The term referred to in the question is known as usury. Usury specifically describes the illegal practice of charging excessively high-interest rates on loans, which often exceeds the legal limits set by state or federal laws. These laws are intended to protect consumers and ensure that borrowers do not fall prey to exploitative lending practices. Usury is often associated with predatory lending, where lenders charge unfair rates that borrowers cannot realistically repay, leading to a cycle of debt and financial distress.

In understanding the context of usury, it is essential to recognize its significance in legal and financial discussions. By establishing maximum allowable interest rates, regulations on usury are designed to promote fair lending practices. This helps create a more equitable financial environment and protects vulnerable populations from being taken advantage of by unscrupulous lenders.

Other terms, such as interest rate manipulation and loan sharking, may describe related practices but do not specifically define the illegal charging of exorbitant interest rates as concisely as usury does. While excessive borrowing pertains to the act of borrowing more than one can repay, it does not address the legality or ethics of the interest rates themselves. Therefore, usury stands out as the most accurate term for the practice identified in the question.