The 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 23rd, 2020, shows 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 financing behavior between natural persons, legal persons and unincorporated organizations.
These provisions shall not apply to financial institutions and their branches engaged in loan business established with the approval of the financial supervision department, as well as 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, both borrowers and lenders can negotiate to determine the specific overdue interest rate, but the maximum interest rate shall not exceed four times the listed interest rate in the one-year loan market when the contract is established.
Legal analysis:
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 financing behavior among natural persons, legal persons and other organizations and among them. These provisions shall not apply to financial institutions and their branches engaged in loan business established with the approval of the financial supervision department, as well as disputes arising from loans and other related financial businesses.
Article 2. When a lender brings a lawsuit to a people's court, it shall provide debt certificates such as IOUs, receipts, IOUs and other evidence that can prove the existence of a legal relationship between lending and borrowing. If the creditor's rights certificate such as IOUs, receipts and IOUs held by the parties does not specify the creditor, and the party holding the creditor's rights certificate brings a private lending lawsuit, the people's court shall accept it. The defendant raised a factual defense against the plaintiff's creditor qualification, and the people's court ruled that the plaintiff did not have the creditor qualification after trial and dismissed the prosecution. Article 3. Where the borrower and the lender have not agreed or clearly agreed on the place of performance of the contract, and no supplementary agreement has been reached afterwards, and it is still uncertain according to the relevant provisions of the contract or trading habits, the place of performance of the contract is the location of the payee. Article 4. If the guarantor provides joint liability guarantee for the borrower and the lender only sues the borrower, the people's court may not add the guarantor as a co-defendant; If the lender only sues the guarantor, the people's court may add the borrower as a co-defendant. Where the guarantor provides a general guarantee for the borrower and the lender only sues the guarantor, the people's court shall add the borrower as a co-defendant; If the lender only sues the borrower, the people's court may not add a guarantor as a co-defendant. Article 5 After placing a case on file, if the people's court finds that private lending itself is suspected of illegal fund-raising, it shall rule to dismiss the prosecution and transfer the clues and materials suspected of illegal fund-raising to the public security or procuratorial organs. If the public security and procuratorial organs refuse to file a case, or the case is dismissed after investigation, or the procuratorial organs make a decision not to prosecute, or the effective judgment of the people's court finds that it does not constitute the crime of illegal fund-raising, the people's court shall accept the case. Article 6 If a people's court finds clues and materials related to a private lending dispute case but not the same fact after filing a case, it shall continue to try the private lending dispute case and transfer the clues and materials suspected of illegal fund-raising to the public security and procuratorial organs. Article 7. The basic facts of private lending cases must be based on the trial results of criminal cases. If the criminal case has not been concluded, the people's court shall order to suspend the proceedings.
Legal basis: 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 loan principal and interest in the early stage, the interest shall be included in the loan principal in the later stage, and the creditor's rights certificate shall be reissued. If the interest rate in the early stage does not exceed four times the market quotation of the one-year loan when the contract is established, the amount specified in the reissued creditor's rights certificate can be confirmed as the loan principal in the later stage. The overcharged interest shall not be used as the loan principal in the future.
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 market quotation of the one-year loan at the time of the establishment of the contract, the people's court will not support it.