Usury (excessive interest) claim elements

The essential elements of a usurious transaction are: "(1) a loan of money, (2) an absolute obligation to repay the principal, and (3) the exaction of a greater compensation than allowed by law for the use of the money by the borrower." First Bank v. Tony's Tortilla Factory, Inc., 877 S.W.2d 285, 287 (Tex. 1994). The Texas Finance Code defines the term "loan" as "an advance of money that is made to or on behalf of an obligor, the principal amount of which the obligor has an obligation to pay the creditor," and an "obligor" is "a person to whom money is loaned or credit is otherwise extended." TEX. FIN. CODE ANN. § 301.002(a)(10), (13) (Vernon 2006). A "creditor" is "a person who loans money or otherwise extends credit." See TEX. FIN. CODE ANN. § 301.002(a)(3) (Vernon 2006). Section 305.004 provides for additional monetary damage if a creditor charges and receives more than twice the legal rate of interest. TEX. FIN. CODE ANN. § 305.004 (Vernon 2006). Compare with § 305.003 (states creditor liable if he or she "charges or receives" usurious interest). SOURCE: 06-09-00009-CV (6th Court of Appeals) (2/26/10)