DEFINITION of 'Unlawful Loan'

A generic term used to describe the act of giving money to another party in exchange for future repayment of the principal amount plus interest in a way that breaks a law. Examples include loans with illegally high interest rates, loans in amounts exceeding legal lending limits and loans that disguise their true cost in violation of the Truth in Lending Act.

BREAKING DOWN 'Unlawful Loan'

The Truth in Lending Act applies to most types of credit, whether it be closed-end credit (such as an auto loan or mortgage) or open-ended credit (such as a credit card). The Act regulates what companies can advertise and say about the benefits of their loans or services.

RELATED TERMS
  1. Amount Financed

    The actual amount of credit made available to a borrower in a ...
  2. Closed-End Credit

    A loan or extension of credit in which the proceeds are dispersed ...
  3. Excess Loans

    A loan made by a state chartered or national bank to an individual ...
  4. Loan Committee

    The lending or management committee of a bank or other lending ...
  5. Loan Commitment

    A loan commitment is a loan that may be drawn down or is due ...
  6. Refinance

    1. When a business or person revises a payment schedule for repaying ...
Related Articles
  1. Personal Finance

    Personal Loans vs. Car Loans

    How to tell whether a personal loan or a car loan is better for you.
  2. Personal Finance

    Personal Loans: To Lend Or Not To Lend?

    Attempting to help a loved one with a cash loan can put a strain on your relationship - and your bank account.
  3. Personal Finance

    Different Needs, Different Loans

    Find out what options are available when it comes to borrowing money.
  4. Personal Finance

    How To Apply For a Personal Loan

    Learn about different avenues for applying for a personal loan, and learn valuable tips to help you get your personal loan application approved.
  5. Financial Advisor

    The 7 Best Peer-To-Peer Lending Websites (LC)

    A look at some of the most well-known and reputable peer-to-peer lending websites, their business models and successes to date.
  6. Small Business

    Lending Clubs: Better Than Banks?

    If you need to borrow money and your credit is making it tough, this new option may be just what you're looking for.
  7. Personal Finance

    Student Loan Debt: Is Consolidation The Answer?

    Consolidating your student loans offers convenience, but there are drawbacks.
  8. Managing Wealth

    Unsecured Personal Loans: 8 Sneaky Traps

    If you are seeking a personal loan, be aware of these pitfalls before you proceed.
  9. Insights

    Forces Behind Interest Rates

    Get a deeper understanding of the importance of interest rates and what makes them change.
  10. Insights

    An Introduction to Government Loans

    Government loans further policymakers' efforts to create positive social outcomes by offering timely access to capital for qualified candidates.
RELATED FAQS
  1. What are the typical requirements to qualify for closed end credit?

    Learn what closed-end credit is, and the various requirements that borrowers must meet in order to obtain a closed-end credit ... Read Answer >>
  2. What are the pros and cons of life insurance policy loans?

    Find out the pros and cons of borrowing against your life insurance policy to help you decide if this loan type is the right ... Read Answer >>
  3. Are secured personal loans better than unsecured loans?

    Read about the differences between secured loans and unsecured loans and how they are used. Learn about forms of collateral ... Read Answer >>
  4. In what instances does a business use closed end credit?

    Find out how businesses use closed-end credit to finance large purchases such as vehicles, equipment and property, including ... Read Answer >>
  5. What is the difference between a loan and a line of credit?

    Learn to differentiate between lines of credit and standard loans, and determine when you are likely to use each method of ... Read Answer >>
Hot Definitions
  1. Pro Forma

    A Latin term meaning "for the sake of form". In the investing world, it describes a method of calculating financial results ...
  2. Trumpcare

    The American Health Care Act, also known as Trumpcare and Ryancare, is the Republican proposal to replace Obamacare.
  3. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
  4. Portable Alpha

    A strategy in which portfolio managers separate alpha from beta by investing in securities that differ from the market index ...
  5. Run Rate

    1. How the financial performance of a company would look if you were to extrapolate current results out over a certain period ...
  6. Hard Fork

    A hard fork (or sometimes hardfork) is a radical change to the protocol that makes previously invalid blocks/transactions ...
Trading Center