An unlawful loan is a loan that fails to comply with—or contravenes—any provision of prevailing lending laws. Examples of unlawful loans include loans or credit accounts with excessively high-interest rates or ones that exceed the legal size limits that a lender is permitted to extend.

An unlawful loan may also be some form of credit or loan that disguises its true cost or fails to disclose relevant terms regarding the debt or information about the lender. This sort of loan is in violation of the Truth in Lending Act (TILA).