1, high penalty interest
Loan contracts usually have default clauses and penalty clauses. If the borrower repays the loan on time, it only needs to repay the principal and interest normally. Once the borrower breaches the contract, the borrower needs to pay the corresponding liquidated damages or penalty interest according to the contract.
Generally speaking, the penalty interest is between 1%-3%. According to the Notice of the People's Bank of China (Yinfa [2003] No.25 1), the default interest rate of overdue loans (loans that the borrower fails to repay on the date agreed in the contract) was changed from1in 2004 to 30%-50% of the loan interest rate agreed in the loan contract.
For overdue loans, from the overdue date to the time when the principal and interest are paid off, interest will be charged at the default interest rate. For the interest that cannot be paid on time, compound interest will be calculated according to the penalty interest rate. Besides, this is a bank loan. If it is a small loan company, many will calculate the penalty interest every day, generally ranging from 2- 5/ 10000 per day.
2, will be prosecuted.
If the borrower fails to pay back the money, the lending institution may bring a lawsuit to the court. If the borrower loses the case, he will not only have to face the assets auctioned at a low price to repay the debt, but also bear the legal fees and expenses (the promise of legal fees needs to be stipulated in the contract and other conditions need to be met). These extra burdens are the cost of the borrower's default.
If the borrower refuses to repay the loan, it may be blacklisted by the executor, and generally blacklisted by the executor, so many things will be restricted.