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LSDefine
Simple English definitions for legal terms
cap
Read a random definition: long-term capital gain
A quick definition of cap:
A cap is a limit on how much money someone can earn, pay, or receive. For example, a loan may have a maximum interest rate, a business may set a cap on how much they charge loyal customers, and the government may limit the amount of assets someone can have to receive welfare benefits.
A more thorough explanation:
A cap is a limit set on something like income, interest, fees, loans, or benefits. It means that there is a maximum amount that can be earned, charged, borrowed, or received.
- A loan can have different interest rates depending on the market, but there is a cap rate of interest that cannot be exceeded. This means that the borrower will not have to pay more than a certain amount of interest on the loan.
- Businesses can set a cap on maintenance fees for frequent customers. This means that no matter how many times a customer uses their services, they will not have to pay more than a certain amount for maintenance.
- Congress sets a cap on total assets an individual can own to be eligible for welfare benefits like supplemental security income or SNAP. This means that if someone owns more than the set amount, they will not be eligible for these benefits.
These examples illustrate how a cap works by setting a limit on something. It ensures that there is a maximum amount that can be earned, charged, borrowed, or received, which can be helpful in preventing excessive fees or benefits to those who do not qualify.