Texas Crammer Practice Exam

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What do usury laws primarily regulate?

Minimum interest rates
Maximum interest rates
Interest penalties
Interest deductions

The correct answer is: Maximum interest rates

Usury laws are designed to protect consumers by regulating the maximum interest rates that lenders can charge on loans. These laws are crucial for preventing predatory lending practices and ensuring that borrowers are not subjected to excessively high rates of interest that can lead to overwhelming debt. By establishing a cap on interest rates, usury laws create a more equitable lending environment and promote fair treatment of borrowers. Thus, the focus of these regulations is primarily on limiting how much interest lenders can impose rather than setting minimum rates, implementing penalties, or addressing tax-related interest deductions.