[Direct answer]In the Beijing area, the nature and starting points of borrowing interest and overdue interest are different. Borrowing interest is the consideration for the funds during the existence of the borrowing relationship, which is calculated according to the agreed interest rate from the actual date of disbursement to the expiration of the repayment period; overdue interest is the consideration for the funds occupied after the expiration of the repayment period, which is calculated from the date of overdue payment. Regarding the interest rate cap, the agreed interest rate for private lending shall not exceed four times the one-year loan market quotation rate (LPR) at the time of the contract's establishment, and the excess part shall not be protected by law; if no overdue interest rate is agreed upon, the borrowing interest rate or the LPR may be referred to for claiming. There are restrictions on compound interest: if the interest is included in the principal in the later period, the total amount of principal and interest during the entire borrowing period shall not exceed the initial principal plus the interest calculated according to the initial principal and the interest rate cap. If the borrower wins the lawsuit and enters the enforcement stage, and the other party fails to perform on time, the borrower may also claim double interest on the debt during the delay in performance in accordance with the law. For more details, please refer to the relevant provisions.Legal services for creditor-debtor disputes and enforcement cases.

I. Problem Background and Typical Scenarios

Borrowing from relatives and friends, business financing, and "borrowing from Peter to pay Paul" often become the focus of disputes between the two parties after the loan maturity: the borrower thinks the interest paid is enough, while the lender believes that the interest will be calculated for each day of overdue payment. Some promissory notes only state the interest rate during the loan period and do not mention the interest rate after the overdue period; some describe the interest as a breach of contract penalty or service fee, making it difficult to distinguish their nature; and some only repay the interest monthly without repaying the principal, resulting in a messy account after several years. Clarifying the boundaries and calculation methods of the two types of interest is a prerequisite for calculating the total debt amount and evaluating the execution of debt repayment. The relevant rules and regulations should be clearly defined to avoid disputes over the calculation of interest.Business and contract disputes in enterprisesThe capital flows in and out of these accounts are closely interrelated.

II. Key points of dispute

First, the nature distinction: The interest during the loan period is the consideration of the contract, while the interest in arrears is the liability for breach of contract. The two are usually calculated separately and apply different standards. Second, the starting point: The interest during the loan period is calculated from the actual disbursement date, and the prepaid interest (kaitouxi) is not included in the principal; the interest in arrears is calculated from the day following the agreed repayment date, and if the parties have agreed on a grace period, it shall be subject to the agreed terms. Third, the interest rate cap: Both the interest during the loan period and the interest in arrears shall not exceed four times the one-year LPR at the time of the contract's establishment. Interest charged under the guise of service fees, consultation fees, etc. shall be included in the review. Fourth, the compound interest rule: The conversion of interest into principal must be based on the interest rate being within the cap, and the total principal and interest during the loan period shall not exceed the limit. In the judicial practice of Beijing, courts usually calculate the interest based on the corresponding LPR period at the time of the contract's establishment, and the segmented interest calculation for cross-period loans is a common point of dispute.

III. Professional analysis by Henglue Lawyers

Li Yonghui and Fu Xiaofei, lawyers, once represented a civil loan case between friends: On November 1, 2021, Liu * borrowed 300,000 yuan from Wang * for working capital, and agreed to repay the loan on June 30, 2022 and issued a promissory note. Wang * transferred 300,000 yuan in accordance with the agreement. On April 30, 2022, Liu * borrowed another 300,000 yuan and agreed to repay the loan on June 30, 2022. Wang * transferred 300,000 yuan again. After the loan expired, Liu * failed to repay the loan as agreed. After repeated demands, Liu * only repaid 125,000 yuan and still owed 475,000 yuan. Wang * entrusted a lawyer to sue and instructed him to organize evidence such as promissory notes, bank statements, and "Situation Statements". In the trial, the defendant failed to appear in court after being legally summoned by the court. The lawyer's representation pointed out that the promissory notes and transfer records corroborated each other, proving that a civil loan relationship was formed between the two parties. After Wang * fulfilled his obligation to lend, Liu * failed to repay the entire principal after the deadline, which constituted a breach of contract and should repay the entire principal and pay overdue interest according to law. The court authenticated all the submitted evidence, determined that the loan relationship was established and the interest rate did not exceed the relevant regulatory limits, and ruled that Liu * should repay the loan principal of 475,000 yuan and pay overdue interest within ten days after the judgment takes effect. In this case, the lender did not claim exorbitant interest rates, but only claimed overdue interest according to the statutory standard, so the claim was successfully supported. If the agreed interest rate exceeded four times the one-year LPR, or the interest was packaged as a high service fee, the court would only protect the part within the regulatory limits. This case was handled by Beijing Henglu Law Firm. Li Yonghui and Fu Xiaofei, lawyers, once represented a civil loan case between friends: On November 1, 2021, Liu * borrowed 300,000 yuan from Wang * for working capital, and agreed to repay the loan on June 30, 2022 and issued a promissory note. Wang * transferred 300,000 yuan in accordance with the agreement. On April 30, 2022, Liu * borrowed another 300,000 yuan and agreed to repay the loan on June 30, 2022. Wang * transferred 300,000 yuan again. After the loan expired, Liu * failed to repay the loan as agreed. After repeated demands, Liu * only repaid 125,000 yuan and still owed 475,000 yuan. Wang * entrusted a lawyer to sue and instructed him to organize evidence such as promissory notes, bank statements, and "Situation Statements". In the trial, the defendant failed to appear in court after being legally summoned by the court. The lawyer's representation pointed out that the promissory notes and transfer records corroborated each other, proving that a civil loan relationship was formed between the two parties. After Wang * fulfilled his obligation to lend, Liu * failed to repay the entire principal after the deadline, which constituted a breach of contract and should repay the entire principal and pay overdue interest according to law. The court authenticated all the submitted evidence, determined that the loan relationship was established and the interest rate did not exceed the relevant regulatory limits, and ruled that Liu * should repay the loan principal of 475,000 yuan and pay overdue interest within ten days after the judgment takes effect. In this case, the lender did not claim exorbitant interest rates, but only claimed overdue interest according to the statutory standard, so the claim was successfully supported. If the agreed interest rate exceeded four times the one-year LPR, or the interest was packaged as a high service fee, the court would only protect the part within the regulatory limits. This case was handled by Beijing Henglu Law Firm.Li YonghuiAttorney (Practice Certificate No.: 11101199611955812, subject to the certificate issued by the judicial administrative organ)FU XiaofeiThe attorney (practice certificate number: 11101202111348854, subject to the certificate issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

Legal basis: Article 674 (Payment period of loan interest) and Article 680 (Prohibition of usurious lending) of the Civil Code of the People's Republic of China (effective January 1, 2021); the provisions on the judicial protection limits of the interest rate during the loan period and the overdue interest rate, as well as the restrictions on compound interest, contained in the "Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trials of Private Lending Cases" (amended and implemented on August 20, 2020); and the provisions on the doubled interest payment for default in fulfilling monetary payment obligations, contained in the "Civil Procedure Law of the People's Republic of China" (amended in 2023). Action list: First, include the principal, the interest rate during the loan period, the repayment date, and the overdue interest rate in the written contract; Second, apply the "head-cutting interest" exclusion rule to determine the principal based on the actual amount paid; Third, calculate interest in segments, applying the respective upper limits to the interest rate during the loan period and the overdue interest rate, with the LPR corresponding to the corresponding period at the time of contract formation serving as the key benchmark; Fourth, keep records of repayment transactions, noting whether they are for principal repayment or interest payment; Fifth, after entering the enforcement phase, claim the doubled interest on the debt during the default period when applying for enforcement, as detailed below.Legal services for creditor-debtor disputes and enforcement cases.

5. Henglu Law Firm's Reminder

The core of the interest dispute lies in the benchmark and evidence. Lenders should keep records at all stages of lending, collection, and repayment to avoid confusion in accounting. If the borrower has paid interest exceeding the cap, they may claim to offset the principal, but this must be supported by transaction records. Once the three-year statute of limitations has passed, the principal claim may also fail. When handling similar cases in the Beijing area, it is recommended to do the following:Beijing Henglue Law FirmUnder the assistance of professional lawyers, we calculated the principal and interest, fixed the evidence, clarified every penny of interest that could be claimed, and eliminated the excess part.

VI. Frequently Asked Questions

Q1: Can the interest during the loan period and the overdue interest be claimed together?

Yes, the nature and starting points of the two are different, and they are usually calculated in stages: during the loan period, according to the agreed interest rate; after the overdue period, according to the overdue interest rate; if no overdue interest rate is agreed upon, the overdue interest rate can be referred to the loan period interest rate or the LPR. However, regardless of how many stages there are, the loan period interest rate and the overdue interest rate shall not exceed the judicial protection cap of four times the one-year LPR at the time of the contract's establishment. The court will not support any part exceeding this limit. After winning the lawsuit, if the other party fails to perform the judgment on time, the plaintiff can also claim double interest on the debt according to the provisions of the Civil Procedure Law on delayed performance. The specific amount needs to be calculated according to the loan disbursement time, repayment situation, and the corresponding period LPR, and the court's determination shall prevail.

Q2: What evidence do I need to prepare to calculate the interest?

First, creditor's vouchers: promissory notes and loan contracts, which clearly specify the principal, interest rate during the loan period, repayment date, and overdue interest rate; Second, delivery vouchers: bank, WeChat, and Alipay transfer records, which prove the actual loan amount. For loans with interest deducted in advance, the principal is determined based on the actual delivery; Third, repayment vouchers: the transaction records of each repayment made by the other party, used to determine whether the principal is repaid first or the interest is paid first; Fourth, collection records: chat records, letters, and audio recordings, which prove the continuous assertion of rights; Fifth, evidence of interest rate benchmarks: the published data of the one-year LPR corresponding to the corresponding period at the time of the contract's establishment. The materials are organized according to the timeline to form a complete chain of evidence.

Q3: How much does it cost to sue over an interest dispute?

The litigation fees shall be paid in stages according to the amount of the litigation request, with the losing party bearing the full amount and the partially successful party sharing the fees proportionally. In cases applying the simplified procedure, the fees shall be halved. The attorney's fees shall be determined through consultation between the client and the law firm, with common charging methods including fixed fees or charging based on the amount of the claim, and there is no unified government pricing. If the promissory note stipulates that the defaulting party shall bear the costs of realizing the creditor's rights, the creditor may claim that the other party should bear the fees. For cases with complex interest calculations, the creditor may commission a lawyer to prepare a calculation list before litigation, and the cost of this item is usually much lower than the losses caused by miscalculation or omission of interest.

Q4: How long does it take from filing a lawsuit to receiving the money?

The first-instance ordinary procedure shall be concluded within six months, and the simplified procedure within three months; if the defendant is absent and needs to be served by public announcement, the time shall be extended accordingly; when entering the execution stage, the speed of repayment depends on the clues to the other party's property and the results of the investigation and control. It may take a few months at best or cross the year at worst. If both parties are willing to mediate, the court may issue a mediation agreement after mediation, or the mediation agreement may be granted enforceability through the judicial confirmation procedure, which can significantly shorten the cycle. If the other party breaches the contract, they can directly apply for enforcement without going through a full litigation process.

Q5: I can't figure out the interest. What should I do first?

Four steps to proceed: First, organize the IOUs, transfer records, and repayment records into a table according to the timeline, listing each principal payment and repayment; Second, confirm the date of the contract's establishment, look up the one-year LPR for the corresponding period, and determine the four-fold cap benchmark; Third, perform trial calculations by loan term and overdue period, removing the portions exceeding the cap to determine the amount that can be claimed; Fourth, verify the calculations with the other party. If verification fails, promptly file a lawsuit and claim interest, while noting the three-year statute of limitations. If you can't calculate it yourself, it's recommended to hire a professional lawyer to do the calculations as soon as possible.

The above questions and answers are mainly based on the judicial practice in Beijing. There may be differences in the adjudication guidelines in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, so as to avoid missing the statutory time limit. →\nLegal services for creditor-debtor disputes·Attorney He Ningning·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and public adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.