The loan interest between individuals shall be calculated according to the interest rate agreed by both parties to the loan contract, but the agreed interest rate shall not exceed four times the market quotation of one-year loan. If the excess is not protected by law, the debtor may refuse to repay this part of interest.
According to the law, if there is no agreement or unclear agreement on interest in the loan contract between natural persons, it is deemed that interest is not paid. According to the relevant laws and regulations, the interest rate of private lending can be appropriately higher than the bank's interest rate, but it must not exceed 4 times (including interest rate) of the bank's loan interest rate for the same period. If this limit is exceeded, the excess interest will not be protected. Moreover, the lender shall not include interest in the principal to seek high profits. If interest is included in the principal to calculate compound interest, the excess interest will not be protected.
If the lender requires the borrower to pay overdue interest on the interest-free loans between citizens, or if the interest-free loans from time to time have not been repaid after being urged, the lender may calculate the interest with reference to the interest rate of similar loans from banks.
Legal basis:
civil law
Article six hundred and eighty
It is forbidden to lend at high interest rate, and the lending rate shall not violate the relevant provisions of the state.
If there is no agreement on the payment of interest in the loan contract, it shall be deemed that there is no interest.
If the loan contract does not specify the payment method of interest, and the parties cannot reach a supplementary agreement, the interest shall be determined according to the local or the parties' trading methods, trading habits, market interest rates and other factors; Loans between natural persons are regarded as interest-free.
Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases
Article 25
If the lender requests the borrower to pay interest at the interest rate agreed in the contract, the people's court shall support it, except that the interest rate agreed by both parties exceeds 4 times the market quotation of one-year loan at the time of the establishment of the contract.
The "one-year loan market quotation" mentioned in the preceding paragraph refers to the one-year loan market quotation issued monthly by the National Interbank Funding Center authorized by the People's Bank of China from August 20th, 20th, 20th19th.
Article 27
After the borrower and the borrower settle the principal and interest of the previous loan, the interest will be included in the principal of the later loan, and the creditor's rights certificate will 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.