WHAT HAPPENS TO INTEREST ON NON-PAYMENT OF A LOAN OR LOAN?

Interest is an accessory element to the principal obligation of payment, these may be freely established by the parties or if they ignore it, in the event of default a “legal interest” will be applied to the fee expressly established by the Law. 

There are two types of interest, ordinary or standstill; the former constitute the revenue that the borrowed money produces or must produce, that is, the price paid for the use of the money; while default interest consists of the penalty to be imposed on the debtor for late delivery of the money or for non-payment. 

If the parties agreed to an ordinary interest, these will normally start to be counted from the day the obligation is incurred. 

However, default interest will start to be quantified from the payment due date, that is, the day following the last day on which payment was made. 

On the other hand, there is usury, which occurs when a person obtains for his own profit and in an abusive manner, over the ownership of another or over-interest arising from a loan. 

In this regard, the Supreme Court of Justice of the Nation determined that usury can be configured by excessive or disproportionate collection of both ordinary and non-payment interest, because even if the interest is in arrears, strictly speaking, they are not an immediate consequence of the loan, but rather a sanction imposed for non-payment, it should not be forgotten that the default is directly linked to the obligation to pay or pay the loan on the agreed date. 

For the above, if you have any doubts about ordinary interest or default rates calculated at a legal interest rate or consider that these are being quantified in an abusive way and are probably constituted as usury, come to Bandala | Díaz | Garcia to ask, for our lawyers to advise you and resolve all your doubts.