Source of this article: Times Weekly Author: Xie Yiwen
Liu Jun used to run a real estate consulting firm in Harbin.
Relying on the contacts accumulated over the years and first-hand real estate information, Liu Jun's company is small in scale, but it has an endless stream of customers.
Now, Liu Jun has never figured out how he got to this point.
A supply cut, the beginning of a nightmare
The sudden change in the market gave Liu Jun a blow to the head.
In the three years from 2020 to 2022, Liu's company deteriorated.
At the beginning, in order to maintain the company's operation, Liu Jun, as the owner of the company, first exhausted his savings one after another.
Followed by credit cards, Liu Jun recalled that the total limit of his credit card before was about 270,000 yuan, and the limit was reduced again and again from 2021 to 2022, and the total amount was only 110,000 yuan.
The company lost money for three years.
Liu Jun calculated that the company's income in the three years added up to a total of 310,000 yuan, which was not worth the rent, water, electricity and employee salaries.
Personal consumption may be able to survive by saving expenses, but the company's rent, water, electricity, and employee wages are real money flowing out every day.
In the most difficult time, Liu Jun said, it was he who ran Didi to pay salaries to employees.
In the end, the company's bank loan was directly repaid.
Although Liu Jun had tried his best to contact the bank to extend the repayment date and repay the loan as soon as possible, the payment was cut off.
This affects the credit system. As a corporate legal person, Liu Jun also has an overdue credit report. Since then, the company has had less cash flow and fewer tax records. Whether in the name of an individual or a company, Liu Jun was unable to borrow money from the bank.
In the third year, the company went out of business, and Liu Jun was still owed more than 700,000 yuan on the books.
Liu Jun never figured out how he got to this point.
Total35.95%
The colorful online lending platform opened its doors to Liu Jun.
In two years, Liu Jun borrowed about 200,000 online loans from multiple platforms, with high and low interest rates. At present, Liu Jun has paid off most of it.
The highest, with rates close to 36% annualized.
Liu Jun provided a loan contract to the Times, with a loan principal of 20,000 yuan, the funds came from a trust company, with an annualized interest rate of 24% and an annualized guarantee rate of 11.95%, but it was paid monthly along with the principal and interest.
A former practitioner of a small loan company told a reporter from Times Weekly that for online loan disputes in first-tier cities, the courts mostly adopt the 24% interest standard to adjudicate. The portion exceeding 24% is generally not recoverable if the lender has paid interest; However, the court may reduce the part of the interest that has not been paid. If the lender is unable to pay the interest, private mediation may also only pay the principal, and repayment according to the judgment can avoid affecting the individual's credit history.
Mr. Liu said he knew many people who had problems with their credit information, and because they could not borrow money from formal financial institutions, they had to turn to high-interest online loans.
But the high interest rates add to their burden.
The result of the cycle is a point of no return.
The debts are piling up higher and higher, and there are more "black spots" in the credit reporting system, so they can only be forced to turn to online loans with higher interest rates.
The trust promotional materials for which Liu Jun provided the loan read: "The underlying assets are small and scattered, and the trust loans are 4,000 yuan. ”
For borrowers who need to rely on thousands of dollars of "usury" to make a living, this is tantamount to drinking water to quench their thirst.
In September 2015, the Supreme People's Court issued a judicial interpretation on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases, which stated that "if the interest rate agreed between the borrower and the borrower does not exceed 24% per annum, the lender has the right to request the borrower to pay interest at the agreed interest rate, but if the interest rate agreed between the borrower and the borrower exceeds 36% per annum, the interest in excess of 36% per annum shall be deemed invalid, and the borrower shall have the right to request the lender to return the interest paid in excess of 36% per annum." ”
According to the above provisions, 24% is a fixed interest rate that should be protected by civil law, and 24%-36% is a natural debt zone, and the lender has no right to demand the borrower to return it if the borrower fails to pay. But if the interest has already been repaid, it cannot be claimed. More than 36% are red lines and can be sued for return.
However, with respect to the "cut interest" where interest is deducted from the principal in advance, the people's court shall determine the amount actually paid after deducting the cut interest as the principal and calculate the interest rate.
As of September 23, 2024, the number of judgment defaulters in China has exceeded 8.42 million, according to the China Enforcement Information Disclosure Network.
Rate battles
At present, Liu Jun has complained through multiple platforms.
He complained to the Internet Finance Association of China, the China Banking and Insurance Consumer Complaint and Rights Protection Hotline, and the local financial supervision and administration bureau, hoping to recover more than 24% of the expenses.
On an online complaint platform, his complaint was responded to and supported, but the online lending platform involved resolutely refused to admit the violation; There were also complaints that were confirmed, but they were blamed by each other, and the lending trust company and the online lending platform each excused themselves by claiming that the other party had charged the rate for the draft.
On August 20, 2020, the Supreme People's Court amended the Provisions on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases (hereinafter referred to as the "Private Lending Provisions"), which proposed to determine the upper limit of judicial protection for private lending interest rates based on four times the one-year loan prime rate (LPR). Based on the one-year LPR released on August 20, 2024, which is 4 times the 3.35%, the current upper limit of judicial protection for private lending interest rates is 13.4%.
Liu Jun first questioned whether the interest of the online loan platform should also refer to the upper limit of 4 times LPR, and calculate the interest according to each downward step.
Feng Zichen, a partner at Beijing Zhongzi Law Firm, told the Times Weekly reporter that the "Private Lending Regulations" clearly mentions that "financial institutions and their branches established with the approval of the financial regulatory authorities to engage in loan business do not apply to disputes arising from the issuance of loans and other related financial businesses." ”
However, formal online lending platforms require the approval of the financial regulatory authorities to set up, which is not a "private lending" and is not applicable to the 4x LPR regulations.
The guarantee fee of 11.95% is also a point that Liu Jun wants to question.
A former employee of a microfinance company told a reporter from Times Weekly that when he worked in a microfinance company before, the one-year loan guarantee rate paid to the guarantee company was generally about 2%-3%, and if the loan term was longer, the guarantee rate would be higher. Liu Jun's guarantee rate of 11.95% is still higher than that of its peers.
Article 2 of the Several Opinions of the Supreme People's Court on Further Strengthening Financial Adjudication Work (Fa Fa [2017] No. 22) points out that if the borrower of a financial loan contract requests a reduction of the total annual interest rate of 24% on the grounds that the interest, compound interest, penalty interest, liquidated damages and other expenses claimed by the lender at the same time are too high and significantly deviate from the actual loss, it should be supported, so as to effectively reduce the financing cost of the real economy.
On August 23 this year, the State Administration of Financial Supervision and Administration issued the Interim Measures for the Supervision and Administration of Microfinance Companies (Draft for Comments), which pointed out that microfinance companies providing intermediary services such as financing consulting and financial advisory services related to loan business should charge fees based on the actual content of the services provided to ensure that the quality and price are consistent, and shall not charge fees for failure to provide services, and shall not charge interest in the form of fees in disguise.
However, should the guarantee fee be included in the 24% as a disguised interest charge in the form of a fee? There is still controversy.
Guo Shihao, a partner of Beijing Yingke (Shenzhen) Law Firm, told the Times Weekly reporter that the guarantee fee needs to be paid to financial enterprises with guarantee qualifications. With regard to the determination of disguised interest, in a dispute over a financial loan contract, if the borrower believes that the financial institution has indirectly charged interest in the name of service fees, consulting fees, consulting fees, management fees, etc., and the relevant fees charged by the financial institution or the person designated by the financial institution are unreasonable, the people's court may determine whether the borrower should pay or reduce the relevant fees based on the actual situation of the services provided. In specific litigation cases, the judgments of different courts and judges are different, and the guarantee fee may be recognized as part of the interest, or it may be adjusted according to the upper limit of 4 times the LPR.
Another lawyer told the Times reporter that if the guarantee company has no equity relationship with the online loan platform and the funding institution, the guarantee fee charged as an independent third party cannot be regarded as a disguised interest charge.
By the end of 2023, there were 6,550 microfinance companies in China, with a loan balance of 843.1 billion yuan. Among them, there are 179 online microfinance companies, with a loan balance of 173.9 billion yuan.
(At the request of the interviewee, Liu Jun is a pseudonym)