Legal basis: Article 3 of the Notice of the People's Bank of China on Issues Related to RMB Loan Interest Rate involves penalty interest rate. The default interest rate of overdue loans (loans that the borrower fails to repay on the date agreed in the contract) is changed from the current daily interest rate of 2. 1% to the default interest rate of 30%-50% above the loan interest rate agreed in the loan contract, and from the current daily interest rate of 5% to 50%- 100% above the loan interest rate agreed in the loan contract.
For loans that are overdue or not used according to the purpose agreed in the contract, interest will be charged at the default interest rate from the date when they are used in loans overdue or not according to the purpose agreed in the contract until the loan principal and interest are fully paid off. For the interest that cannot be paid on time, compound interest shall be calculated at the penalty interest rate.