Where usury control comes from
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.) — a conforming interpretation of art. 174 — 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 they spot it.
The guiding parameters: how the judge thinks
47/2014 lists the elements for assessing whether a rate is manifestly excessive:
- The type of relationship between the parties and their status (merchants or not);
- The purpose of the loan (consumer or productive) and its amount;
- The term, and the existence of collateral;
- The rates institutions charge for similar transactions, inflation and other market conditions;
- The debtor's 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 is three times 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 borrower's risk profile, the coverage ratio on the collateral, the term). Ample collateral justifies lower rates — and makes your clause more defensible.
- Ordinary and default interest kept separate and proportionate. Stratospheric default interest "meant 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 or 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 looks cheap in predatory credit always ends up very expensive — for both sides of the table.