In difficult circumstances brought about by the economic crisis, many families have been found themselves having to take out small loans with disproportionate and abusive interest rates. In such cases, it is possible to go to court (with their own or a Court appointed lawyer) and request the annulment of the loan on the basis of art. 1 of the Law of 23 July 1908 on the nullity of usurious loan contracts.
Some judgments have made it crystal clear that lending small amounts of money at extraordinarily high interest rates to someone who needs to borrow the money precisely because of hardship, inexperience or limited mental faculties is usury and therefore the loans are null and void.
By way of example, according to the courts there is no other way to interpret a loan of 1500€ at an interest rate of 24.000% “unless the borrower were in conditions of desperate financial need”.
As a result, bearing in mind that according to the Bank of Spain’s published statistical data, the highest interest rate at the time the loan was contracted could be up to one-third of the agreed rate, the Court ruled that the agreed interest rates are significantly higher than normal rates and are as such manifestly disproportionate to the circumstances of the case. When classifying them as “abusive”, the Court might consider that there are sufficient grounds to consider that the consumer accepted such interest “because of hardship, inexperience or limited mental faculties”. Consequently, under Art. 3 of the more than 100-year-old Act for the Suppression of Usury, the plaintiff should only have to repay the sum received without interest.