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 26. The loan amount specified in debt certificates such as IOUs, receipts and IOUs is generally recognized as the principal. If interest is deducted from the principal in advance, the people's court shall confirm the actual amount lent as the principal.
Article 28 If the borrower and the lender have an agreement on the overdue interest rate, it shall be implemented in accordance with the agreement, but it shall not exceed four times the quoted interest rate of the one-year loan market at the time of the establishment of the contract.
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.