Court Orders Repayment of CNY 5 Million Loan with Interest
In this case, the plaintiff, Mr. Wang, brought a civil lawsuit against the borrower, Mr. Chen, and two guarantors, Mr. Zhang and Ms. Liu, seeking repayment of a loan of CNY 5 million together with interest. The court ruled in favor of the plaintiff, ordering the borrower to repay the principal and interest at a reduced monthly rate, and holding the guarantors jointly and severally liable.
The dispute arose from a loan agreement dated February 11, 2011, when the borrower, Mr. Chen, requested funds for working capital. Mr. Wang loaned him CNY 5 million with a monthly interest rate of 3.5% and a repayment deadline of July 10, 2011. Mr. Chen issued a handwritten promissory note. The two guarantors, Mr. Zhang and Ms. Liu, signed the note as sureties, agreeing to assume joint liability for the debt and related costs. Interest was paid until July 10, 2011, but thereafter no payments were made. After repeated demands, the defendants failed to repay, prompting Mr. Wang to file suit.
During the hearing, the plaintiff presented several pieces of evidence, including the promissory note, a remittance receipt showing the transfer of funds to Mr. Chen’s bank account, and identity documents. The defendant Mr. Chen appeared and admitted receiving the loan but disputed the interest rate, claiming the interest term was added later. He acknowledged paying CNY 875,000 in interest. The other two defendants did not appear and waived their right to contest. The court examined the evidence and found consistency between the plaintiff’s claim and Mr. Chen’s testimony regarding monthly interest payments, which supported the existence of a 3.5% monthly rate agreement.
The court held that a lawful private lending relationship existed between the parties. The loan principal of CNY 5 million and the agreed interest were clearly established by the evidence. Although the original contract specified a monthly interest rate of 3.5%, the plaintiff voluntarily reduced the claim to 1.8% per month. The court accepted this reduced rate, finding it compliant with applicable law. The court further found that the two guarantors had validly signed the promissory note as sureties, thus assuming joint and several liability for the repayment of both principal and interest.
According to relevant law, the borrower is obligated to repay the principal and interest as agreed. The guarantors, by signing as sureties, assumed a joint liability that extends to the full amount of the debt, including enforcement costs. The court noted that the guarantors, after performing their obligations, have the right to seek reimbursement from the borrower. The reduction of interest from the originally stated 3.5% to 1.8% per month was permissible, as it did not exceed legal limits on interest rates for private lending.
This judgment reaffirms that properly documented loans and unambiguous guarantor signatures create enforceable obligations. The court’s acceptance of the reduced interest rate highlights the flexibility often allowed in civil disputes when the plaintiff modifies claims to align with legal standards. The borrower and guarantors were jointly ordered to pay the principal and interest within ten days, plus additional interest for delayed payment. This case serves as a practical example of how courts handle private lending disputes where guarantors are involved.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.