Nevada Timeshare License Practice Exam

The law that sets a maximum interest rate on financing is known as what?

1. Consumer Protection Act

2. Fair Housing Act

3. Usury Law

4. Fraud Prevention Act

The correct answer is: Usury Law

The correct answer is the Usury Law, as it specifically addresses the maximum interest rates that lenders can charge borrowers. This law is designed to protect consumers from predatory lending practices and to ensure that interest rates remain fair and reasonable. Usury laws vary from state to state, but the primary objective is to prevent excessive or exploitative interest charges that could lead to financial hardship for individuals and families. The other options, while related to consumer protection and rights, do not specifically pertain to the regulation of interest rates on loans. The Consumer Protection Act focuses on preventing unfair, deceptive, or fraudulent business practices, while the Fair Housing Act prohibits discrimination in housing-related situations. The Fraud Prevention Act is aimed at combating fraud and scams but does not govern interest rate limits. Thus, Usury Law is the appropriate answer as it directly addresses the issue of maximum permissible interest rates on financing.