Where usury control comes from
The art. 174, para. 2, LGTOC allows interest to be agreed in the promissory note without setting a cap. In 2014, the First Chamber resolved the contradicción de tesis (conflict of precedent) 350/2013 and redirected that freedom: read in accordance with art. 21.3 of the American Convention on Human Rights ("usury… shall be prohibited by law"), the rule does not shield the exploitation of man by man. Two binding jurisprudencias were born: 1a./J. 46/2014 (10a.) —interpretation of art. 174 in conformity— and 1a./J. 47/2014 (10a.) —the judge must analyze usury on their own motion, even if the debtor does not raise it, and prudentially reduce the rate if it is noticed—.
The guiding parameters: how the judge thinks
47/2014 lists the elements for assessing whether a rate is notoriously excessive:
- The type of relationship between the parties and their standing (merchants or not);
- The purpose of the credit (consumption, productive) and its amount;
- The term, and the existence of collateral;
- The rates of institutions for similar transactions, inflation and other market conditions;
- The debtor's situation of vulnerability.
And the star benchmark: under 1a./J. 57/2016 (10a.), the highest CAT reported for similar transactions works as an objective parameter — if your default rate triples the CAT of the most expensive cards on the market, you have a usury problem waiting to go to court.
What it means for the serious lender
- An explainable rate: document why you charge what you charge (the profile's risk, the collateral's coverage ratio, the term). Ample collateral justifies lower rates — and makes your clause more defensible.
- Ordinary and default interest kept separate and proportionate. Stratospheric default interest "to scare" is the fast track to judicial reduction.
- Comparables at hand: keep market references from the signing date; usury is judged with context.
What it means for the debtor
If you are sued on a promissory note with an abusive rate, usury is a defense —and even if you do not raise it, the judge must examine it—. But beware the mirage: judicial reduction does not erase the debt nor the reasonable interest; it adjusts the excess. Signing "whatever, usury will save me anyway" is a terrible strategy.
Our house rule: rates that stand on their own before the Court's parameters, agreed in writing and with no surprises. What is cheap about predatory credit always ends up very expensive — for both sides of the table.