Legal analysis
Interest within four times the quoted market interest rate of one-year loans is protected by law. However, if it is illegal to raise funds through usury, it will violate the criminal law and the larger amount will be sentenced. The interest rate of private personal loans shall be determined by both borrowers and borrowers through consultation, but the interest rate determined through consultation between the two parties shall not exceed 4 times of the loan interest rate of financial institutions of the same grade at the same period (excluding floating) announced by the People's Bank of China. Those who exceed the above standards should be defined as high-interest lending. In usury activities, the crime of illegally absorbing public deposits is constituted when high-interest lending reaches a certain amount; For the purpose of lending, taking credit funds from financial institutions and lending them to others at a high interest rate, the illegal amount is large, which constitutes the crime of lending at a high interest rate; For the purpose of illegal possession, illegal fund-raising by fraudulent means, with a large amount, constitutes the crime of fund-raising fraud; Usury can easily lead to criminal offences such as illegal detention, kidnapping, injury and fraud; Private intermediaries and individuals with legitimate income from their own funds lend at high interest rates, which belongs to private lending behavior. If there is a loan dispute, it belongs to the category of civil adjustment.
legal ground
"Provisions of the Supreme People's Court City, People's Republic of China (PRC) on Several Issues Concerning the Application of Laws in the Trial of Private Lending Cases" Article 27 After the principal and interest of the previous loan are settled, both borrowers and lenders will include the interest in the latter loan principal and reissue the creditor's rights certificate. 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.