A judge has wiped out a couple's debt of £384,000 which had spiralled from £5,750 due to "extortionate" compounded interest rates.
Tony and Michelle Meadows faced losing their home
Tony and Michelle Meadows, from Southport, Merseyside, took the loan out in 1989 with an annual percentage rate of 34.9% repayable over 15 years.
The pair were taken to court by the debt owners, London North Securities.
But the ruling - expected to have implications for consumers and lenders - could face an appeal.
Michelle Meadows said afterwards: "I can't get my head around it, I'm in a dream."
Tony Meadows added: "We have really kept this to ourselves for most of the time and it has been incredibly hard, but we brought the fight to them and we won.
"It wasn't a wanton spending spree we went on back then, it was just
something we had to do at the time.
"I would advise people thinking of taking a loan to read the small print very
Judge Nigel Howarth said: "The claimant must be dismissed.
"The defendants are not indebted to the claimant pursuant to the agreement and the legal charges do stand redeemed."
The loan company had wanted to take possession of the couple's house.
Mr Meadows, 45, works as a salesman for a windscreen firm, and his 44-year-old wife is a childminder.
The loan was taken out on a high-risk borrowers' rate, Liverpool County Court had heard.
Mr Meadows had told the court that he had borrowed the money to install central heating and convert a bathroom into a third bedroom.
The couple's solicitor Sarah Lapsley said the ruling is potentially important but could but subject to an appeal.