Most states have usury laws (usually statutes) governing the amount of interest that can be charged on a loan. Usury laws vary from state to state, but the elements of a usury claim are generally: (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.

And interest means compensation for the use, forbearance, or detention of money. The term does not include time price differential, regardless of how it is denominated. The term does not include compensation or other amounts that are determined or stated by law not to constitute interest, or that are permitted to be contracted for, charged, or received in addition to interest in connection with an extension of credit.

Service charges, finance charges, and discount points are generally considered interest for purposes of usury. But contingent or uncertain charges are generally not considered interest.

In Kentucky, usury laws are codified under Kentucky Revised Statutes (KRS) and are designed to limit the amount of interest that can be charged on loans to prevent lenders from imposing excessive rates on borrowers. The legal maximum rate of interest in Kentucky is 8% per annum unless otherwise agreed upon in writing, where the parties may contract for interest not exceeding the rate of 19% per annum on the unpaid principal balance of the loan. Loans with a higher interest rate than the law allows are considered usurious, except for certain exemptions provided by law, such as loans made by financial institutions which are generally governed by different standards due to federal preemption. The elements of a usury claim in Kentucky include the existence of a loan agreement, an absolute obligation to repay the principal amount, and the charging of an interest rate exceeding the legal limit. Charges that are considered interest include service charges, finance charges, and discount points, but do not include contingent charges or other amounts that are not classified as interest under Kentucky law.