The Endgame of Business is Lending
A couple of days ago, a chart was shared in our group chat, summarizing internet lending. Basically, all major tech companies are involved (the internet giants rely on backing from real-economy conglomerates). Internet lending lowers people’s sensitivity by quoting daily interest rates, deceiving them into borrowing. The actual annualized rates essentially hit the legal upper limit of 24% (currently that’s the value). Compared with bank lending rates, internet lending is roughly ten times higher. Even the highest mortgage rate ordinary people can get is only 6.8%, and that’s over a 30-year term. Internet loans are basically one-year terms at 24%.
For example, 360 Jietiao achieved monthly profits of several hundred million yuan in just a few years, with net profits nearing 500 million yuan per month.
From a certain perspective, mortgages drain consumption potential for the next 30 years, while online lending drains the consumption potential (more accurately, the potential for ordinary people to stimulate social employment through financing) for the next 10 years. Funds have concentrated in the hands of big tech companies. If these companies cannot drive development and shoulder social responsibility, and if the state has no effective policy left, the next 40 years may not see improvement.
Licensed financial institutions are subject to a judicial practice cap of 24% interest (seven categories of local financial organizations—including microloan companies, financing guarantee companies, regional equity markets, pawnshops, financial leasing companies, commercial factoring companies, and local asset management companies—are financial institutions approved by financial regulatory authorities). The upper limit for private lending interest rates is four times the LPR, which is currently around 13.4%.
The 24% rate was established by law in August 2020. Before that, there were no relevant regulations. It’s worth noting that 24% is the legal threshold: rates within 24% are legally protected; rates between 24% and 36% are governed by mutual agreement; and rates above 36% constitute usury, which courts will not support. While getting refunds is currently impossible, you can try filing a lawsuit. Most likely, the excess portion can be refunded (provided you keep invoices and other evidence).