Your bank granted you a loan whose total cost seems excessive. Or you discover, after signing, that the global effective rate exceeds the thresholds published by the Banque de France. French law has a long-established and precise mechanism for sanctioning such situations: usury regulations. Here is what you need to know to understand whether your loan is usurious, which types of financing are covered, and what remedies are available to you.

The Usury Rate: Definition and Mechanism of the Statutory Threshold

Usury, under French law, refers to the granting of a loan at a global effective rate (TEG) that exceeds, at the time the loan is granted, by more than one-third the average effective rate charged during the preceding quarter for operations of the same nature. This rule is set out in Article L. 314-6 of the Consumer Code (Code de la consommation). The mechanism is arithmetic: if the average effective rate (TEM) for a category of loans is 3%, the usury threshold is 4% (3% x 4/3). Any loan whose TEG or TAEG exceeds this ceiling is classified as usurious.

The law also assimilates instalment sales (ventes a temperament) to conventional loans: the staggering of payment generates interest subject to the same rules. The usurious character is always assessed on the date the loan is granted, not at the time the borrower discovers the problem. This is a point often misunderstood by litigants, who sometimes compare their contract rate with thresholds in force years later.

How the Banque de France Calculates and Publishes Thresholds Each Quarter

The mechanism relies on a quarterly survey conducted by the Banque de France among credit institutions (Articles D. 314-15 and D. 314-16 of the Consumer Code). The Banque de France collects the TEGs actually charged, calculates a simple arithmetic average by category of loans, then the Minister of the Economy publishes in the Journal Officiel (Official Gazette) the average effective rates and corresponding usury thresholds applicable for the following quarter.

Lenders are required to bring these thresholds to their customers’ attention, in the same way as general banking conditions (Article D. 314-17). In practice, this information is rarely highlighted.

Article L. 314-8 provides for a mechanism of transitional measures in the event of exceptional variation in the cost of banking resources. This mechanism was activated between February and December 2023, when the abrupt rise in ECB key rates made the quarterly rhythm too slow: the usury threshold was effectively blocking access to mortgage credit. For ten months, publication became monthly. The episode revealed the structural fragility of the system in a context of rapidly rising rates.

Which Loans Are Subject to the Usury Rate Cap?

The scope of usury regulations is not limited to the standard loan between an individual and their bank. It is both broader than commonly believed – in terms of operations covered – and narrower – in terms of exclusions.

The Concept of Credit Operation: Well Beyond the Simple Loan

The legislature does not target the « loan » in the Civil Code sense, but the « credit operation » within the meaning of Article L. 313-1 of the Monetary and Financial Code: any act by which a person makes or promises to make funds available to another, for consideration. This definition encompasses bank advances, overdraft facilities, credit lines, discounting of bills of exchange, factoring, participatory loans (expressly covered by Article L. 313-17 of the Monetary and Financial Code), and instalment sales.

Courts have the power to reclassify disguised operations. Regardless of the denomination chosen by the parties: if an agreement, under the guise of a sale or another legal act, conceals a credit operation, the court may restore its true nature and apply the usury regime. This power is essential for defeating avoidance schemes.

The Categories Under the Ministerial Order: Which Threshold for Which Financing?

The Order of 24 August 2006, amended several times (most recent significant amendment: Order of 29 June 2022), defines the categories of loans and their corresponding thresholds. Each category has its own average effective rate and therefore its own ceiling. The main categories:

  • Mortgage loans to individuals (Article L. 313-1, 1 of the Consumer Code): segmented by duration (less than 10 years, 10 to 20 years, 20 years and over) and by rate type (fixed, variable). Bridging loans (prets-relais) form a distinct category.
  • Consumer credit: segmented by amount (up to EUR 3,000, from EUR 3,001 to EUR 6,000, above EUR 6,000).
  • Professional overdraft facilities: the only category still subject to the usury cap for professional borrowers (see below).
  • Loans to legal entities without professional activity (category 4, created by the 2022 Order): purely family SCIs (French property investment companies), non-professional associations, foundations. These loans are segmented by duration and rate type, similarly to mortgage loans.

Classification of the loan into the correct category is determinative. A loan intended to repay a prior mortgage loan is not necessarily a mortgage loan within the meaning of Article L. 313-1, which alters the applicable threshold. The Aix-en-Provence Court of Appeal recalled this in a judgment of 21 March 2024 (No. 23/12404) concerning a loan granted by a Belgian bank to individuals.

SCIs, Professionals, Public Authorities: Who Escapes the Cap?

Article L. 314-9 of the Consumer Code excludes from usury protection loans granted to a natural person acting for professional purposes or to a legal entity carrying on an industrial, commercial, artisanal, agricultural, or non-commercial professional activity. This deregulation, stemming from the Law of 1 August 2003 on economic initiative (extended in 2005 then 2010), was based on the finding that the usury cap hindered credit access for businesses, particularly the youngest or riskiest.

The case of SCIs (societes civiles immobilieres – French civil real estate companies) is the main area of litigation. The Cour de cassation held that a farming land grouping (groupement foncier agricole) whose purpose is the ownership and administration of leased property carries on a non-commercial professional activity and therefore falls outside the protection (Cass. civ. 1, 25 November 2015, No. 14-23.224). The solution was extended to SCIs (Cass. civ. 1, 8 September 2021, No. 20-18.642; Cass. civ. 1, 11 January 2023, No. 21-11.750). The case law is consistent: as soon as an SCI carries on rental management activity, it is excluded from the usury regime.

Before the Order of 29 June 2022, legal entities without professional activity (family SCIs with no rental activity, associations) found themselves in a legal vacuum: neither covered by existing categories nor formally excluded by Article L. 314-9. The 2022 Order filled this gap by creating category 4.

Professionals (natural or legal persons) nonetheless retain residual protection: overdraft facilities remain subject to the cap. The legislature considered that the urgent need for cash places the business in a position of weakness, justifying the maintenance of a threshold. This point generates specific litigation on the classification of the operation: overdraft, cash facility, or short-term loan?

Disguised Operations: When the Court Reclassifies as a Usurious Loan

Schemes to circumvent usury often take the form of sale-and-repurchase agreements (ventes a remere) or property holding arrangements (portages immobiliers). The mechanism is as follows: an owner in difficulty sells their property to an investor, with an option to repurchase within an agreed timeframe. The repurchase price is increased by a percentage which, when expressed over the duration of the operation, may exceed the usury threshold.

The Cour de cassation requires a bundle of indicators to reclassify a sale-and-repurchase as a usurious loan: the derisory nature of the sale price relative to the property’s actual value, the vendor’s relocation in the premises, the usurious increase in the repurchase price, and the fact that the purchaser habitually carries out such operations (Cass. civ. 3, 24 June 2021, No. 18-19.771). The mere difference between sale price and repurchase price is insufficient.

A section judgment of the Third Civil Chamber of 1 October 2020 (No. 19-17.668) added an important nuance: the protection against forfeiture clauses (pactes commissoires) benefits debtors « not accustomed to such practices. » A borrower familiar with sale-and-repurchase as a financing method cannot invoke this protection. The solution is severe but logical: the court distinguishes the victim from the experienced operator.

Sanctions for Usurious Loans: Civil and Criminal Avenues

French law sanctions usury on two independent but complementary grounds.

Automatic Imputation of Excess Charges

Article L. 341-48 of the Consumer Code establishes an automatic sanction, without the court needing to pronounce it specifically. Excess charges – i.e. the portion of interest exceeding the statutory threshold – are imputed as of right, first against normal interest still to fall due, then subsidiarily against the principal of the debt. If the loan has already been fully repaid, the lender must return the sums unduly received, with interest at the statutory rate from the date of each undue payment.

This mechanism is distinct from the forfeiture of the right to interest (decheance du droit aux interets), which sanctions TEG errors. The two regimes must not be confused, even though both concern the cost of credit. The imputation under Article L. 341-48 is more favourable to the borrower: it operates automatically and covers all excess charges.

The Criminal Offence of Usury: Two Years’ Imprisonment and EUR 300,000 Fine

Article L. 341-50 of the Consumer Code makes usury a criminal offence (delit). The mere fact of granting a usurious loan is punishable, with fraudulent intent being presumed where the lender is a credit professional. The penalties: two years’ imprisonment and a EUR 300,000 fine. Additional penalties are provided for: publication of the judgment, closure of the business for up to five years, disqualification from practice.

A rarely highlighted point: the article also targets anyone who provides « in any capacity and in any manner whatsoever, directly or indirectly, their assistance in obtaining or granting a usurious loan. » Brokers, intermediaries in banking operations, and agents are therefore criminally exposed. The limitation period runs from the last receipt of interest or principal, which may considerably push back the starting point of the time limit.

Challenging a Usurious Loan: Time Limits, Evidence, and Procedure

A borrower who suspects that the usury threshold has been exceeded must first reconstruct the true total cost of the credit. The exercise is technical: all costs that condition the granting of the loan must be identified – arrangement fees, commissions, mandatory insurance premiums, intermediary remuneration – and the TEG or TAEG recalculated according to statutory methods. Case law takes a broad view of the costs to be included, encompassing for example the subscription of cooperative shares imposed by a mutual bank.

The usurious character is assessed on the date of conclusion of the contract. It is the threshold in force in the quarter when the loan was granted that serves as reference, not the one in force when the dispute arises. The burden of proof lies with the borrower invoking usury. In the case of successive loans, each contract is analysed independently.

The challenge may take two paths. The civil avenue, before the Judicial Court (tribunal judiciaire), aims to obtain imputation of excess charges and restitution of sums unduly paid. The criminal avenue, by filing a complaint (depot de plainte), enables the triggering of public prosecution for the criminal offence of usury. The two actions are independent: the borrower may pursue them simultaneously or successively. The assistance of a lawyer specialising in credit law is decisive here, both for the audit of the contract and for the conduct of proceedings.

Frequently Asked Questions

What is the usury rate?

The usury rate is the maximum statutory rate at which a loan may be granted. It is calculated each quarter by the Banque de France from the average effective rate charged by banks, increased by one-third. Any loan whose TEG or TAEG exceeds this threshold is classified as usurious and exposes the lender to civil and criminal sanctions.

What is the law on usury in France?

Usury regulations are codified in Articles L. 314-6 to L. 314-9 of the Consumer Code (definition, calculation, exclusions). Sanctions are found in Articles L. 341-48 (civil sanction) and L. 341-50 (criminal sanction). The categories of loans and thresholds are specified by the Order of 24 August 2006, last significantly amended by the Order of 29 June 2022.

Does the usury rate apply to SCIs?

It depends on the SCI’s activity. If it carries on rental management activity (even on a family basis), the Cour de cassation considers it to be carrying on a non-commercial professional activity and excludes it from the regime (Cass. civ. 1, 8 September 2021, No. 20-18.642). SCIs with no professional activity whatsoever fall within category 4 created by the Order of 29 June 2022 and benefit from the cap.

Which professional loans remain subject to the usury rate?

Only overdraft facilities granted to professionals remain subject to the cap. All other loans granted to natural persons for their professional needs or to commercial companies have been excluded from the regime since the Law of 1 August 2003.

How can a usurious loan be challenged?

One must first recalculate the TEG or TAEG by including all costs conditioning the grant of the loan, then compare it with the usury threshold in force in the quarter of signing. If the threshold is exceeded, the borrower may act by way of civil proceedings (imputation of excess charges, restitution) or criminal proceedings (complaint for the offence of usury). The two actions are independent.

Do usury regulations apply to international contracts?

Yes, to a large extent. In criminal matters, French law applies as soon as a constituent element of the offence takes place on French territory. In civil matters, usury rules are considered overriding mandatory provisions (lois de police), i.e. imperative provisions that may apply even if the parties have chosen a foreign law.

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