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Cash loan interest rates explained: 36% annual interest rate and "two lines and three districts"

Time: 2017-12-01         Source: Financial 360 original         Author: light

Relevant departments of the cash loan remediation will be on schedule, many non-compliant platform also started off-line rectification, an important reason for non-compliance is the actual product interest rate is too high, in the end how high the interest rate is considered to be lawful and compliant What?

As far back as the financial market reform in November 2013, the Supreme People's Court has delineated 24% and 36% of the two red lines dividing interest rates into three "regions":

Judicial Protection Area

If the lender and the borrower agree that the interest rate does not exceed 24% of the annual interest rate and the lender requests the borrower to pay interest at the agreed interest rate, the people's court will support it;

Invalid area

The interest rate agreed upon by both lenders and borrowers exceeds the annual interest rate by 36%, and the interest on the excess part of the agreement is invalid. Where the borrower requests the lender to return the interest already paid in excess of 36% of the annual interest rate, the people's court shall support it;

Natural debt area

If the lender sues the people's court for the interest in this interval according to the contract, the people's court will not protect it from the law; if the borrower repay the interest and then return it to the court Prosecute recovery, the court will dismiss such a claim;

Vernacular concludes

Within 24% of interest is protected by law, must be returned; more than 36% of the interest can not be returned, also can be recovered by legal means; 24% -36% of the interest, if not returned, The court will not accept the request for money from the borrower, and if it has already been done, the court will not accept the request of the borrower for recovery.

The origin of 24% standard

For private lending, the government controls are long-term. After the founding of New China, one of the earliest Supreme Courts' approval of private lending was the establishment of a four-fold interest rate on Liaoning Province in northeastern China in the early 1950s. Since then, the four-fold interest rate has been used in trial practice. In 1991, a judicial interpretation When continue to use this approach.

In the recent 20 years, the benchmark lending rate issued by the central bank has changed a lot, the lowest is 2%, the highest is 12% and the middle is 5% -8%, so the middle of the final selection 6%, and with reference to the traditional fourfold meaning, a figure of 24% is reached.

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