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Is private loan sharking legal? Will microfinance not go to jail?

Time: 2018-09-18         Source: Banker Risk Management         Author: Silver Business Risk Management

Nowadays, private lending has developed rapidly and is also favored by friends. Private lending has both usury and microfinance. Do you really understand the related matters before the loan?

Private loans and usury are themselves civil law issues, and a series of disputes are often found. So, is private loan sharking legal? What crimes will be involved in private loan sharking? In contrast, the microfinance threshold is low and the lending rate is fast, which can effectively solve the borrower's temporary funding needs, and thus is highly favored by the general public.

Is private loan sharking legal?

This problem can be judged according to the provisions of the Contract Law. When the interest rate of the loan between natural persons is legal within the provisions of the contract law, that is, the zero interest rate paid by the borrower must not violate the regulations on the interest rate limit. It is illegal to violate the relevant effective interest rate. The interest rate agreed between the borrower and the lender shall not exceed 24% (annual interest rate) within the effective regulations.

What crimes will be involved in private loan sharking?

Article 175 of China's Criminal Law stipulates that for the purpose of transferring loans and making profits, if the financial institutions' credit funds are highly profitable and transferred to others, if the amount of illegal gains is large, they shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention, and the illegal gains shall be More than five times the fine; if the amount is huge, the sentence is imprisonment for three years or more and seven years or less, and the penalty is more than one time and five times less than the illegal income.

Some people may think this way. The loan sharks are risky and not cost-effective for the borrower. So, can we choose a small loan for our borrowers? However, what should I do when the microloan cannot afford it, and will the microloan not go to jail?

What if I don’t have money for a small loan?

1. Apply for loan extension to the lending institution.

2. Borrow money from relatives and friends.

3, you can use credit card repayments flexibly.

Will microfinance not go to jail?

We all know that microfinance loans are civil disputes. The general non-malicious arrears or small amount will not involve the degree of imprisonment. If the circumstances are serious, it is very likely that you will go to jail. Small loan companies are also formal quasi-financial institutions. For borrowers with malicious arrears, they can go through the green channel in the court. At present, the collection industry is a very hot industry. The lending institutions specifically assign overdue loans to these collection companies. If the debts are overdue, the collection staff will call the lenders and the lender’s family to urge the repayments. In the case of cooperation, the collection personnel will further adopt the method of picking up the door and collecting the goods. For the arrears, the arrears do not only affect themselves, but also the family and friends. If this is the case, it is not worth it. As a borrower, you must choose the appropriate loan according to your financial ability and repayment ability.

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