Judicial interpretation of private lending

How is the judicial interpretation of private lending stipulated?

Judicial Interpretation of Private Lending In the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Laws in the Trial of Private Lending Cases, which was revised on February 23, 2020, it can be known that private lending refers to free financing among natural persons, legal persons and other organizations.

Provisions of the Supreme People's Court on Several Issues Concerning the Application of Laws in the Trial of Private Lending Cases Article 1 The term "private lending" as mentioned in these Provisions refers to the financial intermediation between natural persons, legal persons and unincorporated organizations.

These Provisions shall not apply to financial institutions and their branches established with the approval of financial supervision departments to engage in loan business, and disputes arising from loans and other related financial businesses.

How to stipulate the overdue interest rate of private lending?

According to the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Laws in the Trial of Private Lending Cases, the borrower and the lender can determine the specific overdue interest rate through consultation, but the maximum interest rate shall not exceed four times the quoted interest rate of the one-year loan market at the time of the establishment of the contract.

Provisions of the Supreme People's Court on Several Issues Concerning the Application of Laws in the Trial of Private Lending Cases Article 28 If there is an agreement between the borrower and the lender on the overdue interest rate, such agreement shall prevail, but it shall not exceed four times the quoted interest rate of the one-year loan market when the contract is established.

If there is no agreement or unclear agreement on the overdue interest rate, the people's court may handle it according to different circumstances:

(a) the people's court shall support the lender's claim that the borrower shall bear the liability for breach of contract for overdue repayment with reference to the interest calculated according to the quoted interest rate standard of the one-year loan market at that time;

(2) If the interest rate during the loan period is agreed, but the overdue interest rate is not agreed, and the lender claims that the borrower will pay the interest during the occupation period according to the interest rate during the loan period from the date of overdue repayment, the people's court shall support it.

The judicial interpretation of private lending can be based on the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases. Private lending refers to the behavior of mutual financing between natural persons, legal persons and other organizations.

Private lending has a long history and has existed since ancient times, but it may not be called private lending at that time. Nowadays, there is an increasing trend of private lending in China. After all, it is safer to apply for a loan from a bank, but the procedures are complicated and the conditions are strict. Therefore, many people will choose to apply for private loans when they cannot apply for bank loans. In this regard, China has made corresponding judicial interpretation provisions.

legal ground

Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases

Article 27 After the borrower and the borrower settle the principal and interest of the previous loan, the interest shall be included in the principal of the next loan and the creditor's rights certificate shall be reissued. If the previous interest rate does not exceed four times the quoted interest rate of the one-year loan market when the contract is established, the amount stated in the re-issued creditor's rights certificate can be confirmed as the future loan principal. The excess interest shall not be recognized as the future loan principal.

According to the calculation in the preceding paragraph, if the sum of the principal and interest that the borrower should pay after the expiration of the loan term exceeds the sum of the interest of the whole loan term based on the initial loan principal and calculated according to the quoted interest rate of the one-year loan market at the time of the establishment of the contract, the people's court will not support it.