Question

Badger Bank and Trust (Badger) is a community bank in Oshkosh, Wisconsin. Badger loaned $5,000 to Plessy and charged him an interest rate that was five (5) percent higher than the statutorily- allowed maximum. This loan would be considered____.
a. usurious
b. fraudulent
c. valid, since Badger can determine what potential profit is necessary to compensated it and its owners for the assumed risk
d. voidable at the election of Badger
e. void at the election of Plessy​

Answer 1

Based on the rate charged to Plessy, we can determine that this loan is a. usurious.

When a loan is usurious:

• It means that the interest charged is exorbitant
• It is considered immoral
• It can be considered illegal if it is above the rate required by law for such loans.

The interest charged is 5% higher than what the law allows here which means that the rate must be quite high.

We can therefore conclude that this loan is usurious and action can be taken against it.

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