Private lending refers to lending between citizens, between citizens and legal persons, between citizens and other organizations. As long as the intention expressed by both parties is true, the mortgage arising from the loan is correspondingly valid, but the interest rate shall not exceed the relevant interest rate prescribed by the People's Bank of China. Private lending is divided into private individual lending activities and lending between citizens and financial enterprises. Private individual lending activities must strictly abide by the relevant provisions of state laws and administrative regulations, and follow the principles of voluntary mutual assistance, honesty and credit.

1. Legality of lending relationship

Private lending is the market behavior that exerts the greatest utility of funds. When a lender lends its own funds to others, it disposes of its own property for the purpose of obtaining interest income; The borrower borrows funds from others for the purpose of living and living business, but also for the convenience of life, development of production needs.

Only legitimate lending relationships are protected by law. If the borrower knows that the loan is used for fraud, drug trafficking, drug abuse and other illegal activities, it is still lent, the state law is not protected, the lender will not only get the creditor's rights, but also be subject to civil, administrative and even criminal law sanctions. If one party takes advantage of the other party's danger, or uses fraud, coercion and other means to make the other party borrow against its will, it is an invalid civil legal act, and the responsible lender can only recover the principal.

2. The legality of lending rates

The interest rate of private lending may be appropriately higher than the interest rate of banks, but the maximum shall not exceed four times the interest rate of similar loans of banks (including the interest rate principal). If the interest rate exceeds this limit, the excess part shall not be protected. At the same time, it also stipulates that the lender must not add interest to the principal to seek high profits, otherwise, if the interest rate exceeds the limit of four times the interest rate of similar loans by banks, the excess part will not be protected.

The above contents are stipulated by the Supreme People's Court in Judicial Interpretation No. 21 of Law (People's) Law [1991]. Therefore, it is obvious that if the loan you consult is more than four times the interest rate of the bank's similar loan, it can be understood as usury, and the excess part is not protected by law because it violates the relevant legal provisions.

Usury is risky, the lender can refuse to repay, then usury needs to use violence or other means to maintain, most of this way is illegal, sentencing should also refer to the means of the lender, the threat to the safety of others will be heavier, others will be lighter, but depending on the specific behavior.

To sum up, private lending has been recognized by the state, but it must be a legal lending relationship and a reasonable lending interest rate, that is, it cannot be used for illegal things and cannot exceed the bank interest rate too much.