The law stipulates that the interest rate agreed upon by both parties cannot exceed the annual interest rate of 24%. Within this scope, if the lender requests the borrower to pay interest according to the agreed interest rate, the people's court shall support it. If the interest rate agreed between the borrower and the borrower exceeds 36% of the annual interest rate, the interest agreement for the excess portion is invalid.
Article 26 of the "Regulations of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases" stipulates that if the interest rate agreed between the borrower and the borrower does not exceed the annual interest rate of 24, the lender shall request the borrower to pay the interest rate according to the agreed interest rate. If interest is paid, the people's court shall support it. If the interest rate agreed between the borrower and the lender exceeds the annual interest rate of 36, the interest agreement for the excess portion is invalid. If the borrower requests the lender to return the interest that has been paid in excess of 36% of the annual interest rate, the People's Court shall support the request.
Extended information:
Private lending is a kind of private financial activity with a long history and widespread around the world. It mainly refers to between natural persons, natural persons and legal persons or other organizations. , as well as the act of financial intermediation between legal persons or other organizations with currency or other securities as the subject matter. Financial institutions and their branches established with the approval of the financial regulatory authorities to engage in loan business, grant loans and other related financial services, do not fall within the scope of private lending.
Private lending and borrowing can occur between natural persons, between natural persons and legal persons or other organizations, or between legal persons, other organizations, and between them. If a legal person or other organization raises funds from employees in the form of loans within the unit for use in the unit's production and operation, as long as there is no existence of Article 52 of the "Contract Law of the People's Republic of China" or the "Supreme People's Court's Regulations on In the circumstances specified in Article 14 of the Provisions on Several Issues Applicable to Laws in the Trial of Private Lending Cases, the private lending contract will be valid.
Why the private lending interest rate red line is adjusted:
The main purpose of adjusting the private lending interest rate red line is to guide and standardize private lending behavior. After all, an excessively high interest rate protection ceiling is not conducive to creating an external environment for interest rate market-oriented reform, and is not in line with the direction of interest rate market-oriented reform. Lowering the upper limit of judicial protection for private lending interest rates is more in line with the actual level of my country's economic and social development, and will also help promote the stable and healthy development of private lending.
Also, this measure can actually reduce the financing costs of small, medium and micro enterprises to a certain extent. And if the upper limit of interest rate protection for private loans is too high and the debtor is unable to perform its contract, it may cause many problems.
It is precisely because of this that the Supreme People's Court will use 4 times the one-year loan prime rate (LPR) authorized by the National Interbank Funding Center to publish on the 20th of every month as the standard. The upper limit of judicial protection for private lending interest rates has been redetermined, replacing the original "two lines and three districts" regulations based on 24 and 36.