As a financing method with abundant resources and simple operation, private lending has alleviated the contradiction of insufficient bank credit funds to a certain extent and promoted economic development. But it is obvious that the randomness and risk of private lending can easily lead to many social problems. Borrowing money from private individuals is mostly a semi-public or even secret fund transaction. Both borrowers and borrowers only rely on so-called credibility to maintain. The loan procedures are incomplete, there is no secured mortgage and there is no reliable legal guarantee. Once the situation changes, it is easy to cause disputes and even criminal offences. From this point of view, private lending must also be standardized and gradually brought into the track of legalization.
In order to avoid unnecessary economic disputes between borrowers and lenders and protect the economic interests of creditors, we need to pay attention to the following aspects:
Lending should be legal.
Only legal loan relationship can be protected by law. If the borrower knows that the loan is used for fraud, drug trafficking, drug abuse and other illegal activities, the national laws will not protect it, and the lender will not only get the creditor's rights, but also be punished by civil, administrative and even criminal laws. If one party takes advantage of others' danger, or uses fraud, coercion and other means to make the other party borrow money against his will, it is an invalid civil legal act, and the responsible lender can only recover the principal.
Conclude an agreement
In real life, some lenders often refuse to issue written documents because the other party is a relative or friend, out of respect or out of trust. In this way, once the borrower denies it, it is difficult for the lender to protect the creditor's rights. Even if you go to court, you will end up losing because you can't prove it. Therefore, the lender must conclude a written loan agreement with the borrower, indicating the name, loan type, currency, amount, time, term, purpose, interest rate, repayment method, guarantor and liability for breach of contract, and sign it, with each party holding one copy and keeping it properly.
The interest rate should be legal.
If the interest rate agreed between the borrower and the borrower does not exceed the annual interest rate of 24%, and the lender requests the borrower to pay interest at the agreed interest rate, the people's court shall support it. The interest rate agreed between the borrower and the borrower exceeds the annual interest rate of 36%, and the interest agreement in excess is invalid. The people's court shall support the borrower's request to the lender to return the part of the interest paid that exceeds 36% per annum. [2]
guarantee
For large or risky loans, guarantee and mortgage procedures should be performed, and the borrower should be required to provide a third party with certain economic strength as its guarantee, or the borrower should use personal property such as certificates of deposit, bonds, motor vehicles and real estate as collateral, and conclude a written loan agreement. If some properties are mortgaged, they should also go through the mortgage registration formalities with the relevant departments. In this way, once the borrower is unable to repay the debt, he can claim the loan from the guarantor or legally offset the loan with collateral.
Timely collection
According to Article 135 of the General Principles of Civil Law, the limitation period for the lender to apply to the people's court for creditor's rights protection is two years. If two years have passed since the maturity of the loan, and the lender cannot prove that it has been collected during the period, the law will not protect it. In order to prevent the statute of limitations from exceeding, the lender shall require the borrower to write a repayment plan before the expiration of the statute of limitations, which can be recalculated from the new repayment period.
Applied law
If the borrower fails to honor his credit, the creditor shall not take excessive illegal acts such as hostage-taking and forced robbery of goods, but shall correctly use legal weapons to safeguard his legitimate rights and interests. When necessary, the court may take compulsory measures.
Beware of "illegal fund-raising" private lending
Some individual enterprises or owners take advantage of people's greed for high profits, throw high-interest bait, and illegally raise funds underground between people in the same area or familiar with them. Such fund-raising operators are either profligate and unable to repay, or abscond with money, leaving creditors with nothing to lose. This kind of "off-flavor" private lending is the most risky and should be highly valued by everyone.
sign a contract
Most private loans represent contracts in the form of "IOUs", which is generally acceptable. However, due to the simplicity of IOUs, it is difficult to handle disputes on this basis. Therefore, it is best for borrowers and borrowers to sign a formal loan contract, specifying the rights and obligations of both parties in detail, so as to avoid future troubles. Of course, if there is no written receipt or contract between the two parties, but both parties admit to borrowing, it can be confirmed that there is a loan relationship between the two parties.
Interest agreement
In private lending, the most likely contradiction between borrowers and lenders is interest. The law clearly stipulates this:
(1) If there is a dispute between the borrower and the lender about whether there is an agreed interest rate and it cannot be proved, the interest can be calculated by referring to the bank's similar loan interest rate.
(2) If the parties dispute the interest rate standard, they can determine the interest rate standard within the standard of not exceeding 4 times the interest rate of similar loans of banks.
(3) In interest-bearing loans, the interest rate may be appropriately higher than the bank's interest rate, but it shall not exceed four times the bank's interest rate for similar loans, that is, usury is not allowed. It doesn't matter if it is more than 4 times (according to the current interest rate, 4 times is more than 29 o'clock). When there is a dispute at most, the court will not protect the excess, but when there is no dispute, it can get higher income. Explain that this provision is not punitive.
(4) The lender shall not include the interest in the principal to calculate compound interest, otherwise it will not be protected by law. This provision is punitive in judicial practice. If you violate this provision, you may be sentenced by the court to pay interest according to the loan interest rate for the same period. Then, the multiple you agreed at the beginning may be claimed or unclaimed.
(5) If there is a dispute between the two parties over the borrowing of foreign currency or Taiwan dollars, the lender may grant permission when it requests repayment in foreign currency or Taiwan dollars. If the borrower does not have the same currency, he can repay it in RMB with reference to the foreign exchange rate at the time of repayment. If the lender requests to pay interest, it may calculate the interest with reference to the foreign currency savings rate of China Bank.
Pay attention to the restrictions of action.
Because most private lending occurs between friends and relatives, many people do not pay due attention to it. Unexpectedly, some scoundrels just took advantage of this loophole and took the way of default, long delay and evasion to avoid debt. I would like to remind you that two years from the date of the expiration of the repayment period is the statute of limitations stipulated by law. During this period, you must claim your creditor's rights from the borrower. After 2 years, the court will not protect your creditor's rights. If no repayment date is specified, the longest limitation of action is 20 years.