Currently loans are something widely used by many users, because as technology advances, it is easier to power apply for and authorize loans to almost anyone. However, despite being so popular, loans are still unknown to many users, especially in the field of regulations or legislation, and one of the terms that should interest us, and that nevertheless often goes unnoticed is the legal interest of money, but before understanding this term we must understand the following.
When we apply for a loan We agree with the lender or the financial institution a period in which we must settle our debt; in addition to that it is specified the interest that is applied to the base loan amount, this interest can be simple or compound, plus it can change compounding period in which we must make the payments of our debt.
And although so far everything seems perfect there are situations that occur in real life and that are not always controllable, one of these situations is the delay in some payment of our debt.
There are two concrete situations, when we are late in a single payment to settle the debt, as is the case with microcredits in which the lender requests loan settlement in a single payment, generally within a month of having authorized the loan. The second situation is when we are late in a payment of our uniform series, for example, if our payment must be made on the 2nd of each month and in the month of August we are late, not being able to cover the amount corresponding to that month.
Another matter that we must know before we can define the main topic of this article is the delay, this legal term is used to define the failure to pay in the agreed time due to negligence, meaning that the delay is intentional.
This is important to keep in mind because the legal interest of money It only applies when the person who must cover the debt is in delay; In other words, if the reason you were unable to make the payment was a situation completely beyond your control, the penalty could vary.
One last fact that we must understand clearly before entering fully into the decision of the legal interest of money is that the loan we request is a contract or an agreement between the lender and the user; And as in any contract, both parties agree to carry out certain clauses, and if we do not comply with them, there are clauses in which there is a penalty for non-compliance. This means that if we commit to make the payment on day two and do not do so, the financial institution may carry out a penalty. What is it?
Legal interest of money
The penalty that is managed by payment delays agreed is generally through the monetary charge of a certain amount. These surcharges on our balance to be covered could be a reason for financial institutions to abuse so that large amounts are charged, so to regulate this situation the government issues the legal interest of the money.
Once we understand what is a contract, a loan, the delay, and a surcharge, we can fully enter the decision of the legal interest term of money. This can be defined as a percentage amount that is legally fixed by the government, in order to calculate in a fair way the amount that must be paid as compensation for making the payment late.
Now it is true that the government establishes the Annual interest rate that will apply to cases in which payment delays are incurred, however something very important to consider is that this interest rate applies only if there is no agreement in which the user of the loan agrees to make the surcharges with based on a different interest rate.
It is for the above that it is very important that as users of a loan we review the contract quite well in search of some specification in this matter, because in case we approve that the surcharge is made with a measure other than the legal interest of money, then the rate could have increased considerably.
However, there are many situations in which, in the event that neither party has agreed to a certain interest in case of delay, the law establishes the amount to be covered. Sometimes there are very specific rules on certain matters, so it is important to review these laws in order to be able to correctly define the amount to be covered. Article number 1108 of the Civil Code is in charge of regulating these matters.
Another issue that we must consider is that this interest is applicable to the amount owed, Therefore, the resulting total payment will be the equivalent of the payment corresponding to said period of time plus the charge for the delay. Therefore, the payment to be covered is the equivalent to the sum of the debt amount plus the amount added as a surcharge.
Current legislation
Something that should be clarified is that currently who governs this interest rate is the bank of Spain independently, that although it is under the command of the government of Spain, it is a different entity.
This is important because the legal interest of money in its beginning if it was completely regulated by the government, that is to say the legal part, so that its regulation was dictated by the legislation.
It was until December 30, 1997 that any existing link between the legal interest of money with the basic interest rate dictated by the bank of Spain. In this way, the relationship that existed between the interest rate dictated by the bank and the legal interest of the money.
This was very important because during 2011 and 2012 the Spanish public debt shot up quite notoriously, due to this the financial markets increased their value in the same way.
But thanks to the elimination of the relationship between said interest rates the legal interest on money It did not show any significant increase, which would have occurred had it not considered the matter.
Special case
An interesting historical fact regarding the legislation on this matter is that in the Spanish protectorate of Morocco there were completely independent legislation from the rest of Spain.
In this place the interest was set at 6% per year, but I also limit the possibility that those involved made use of an agreement in which said iteres were greater than 12%, so regardless of whether both parties had signed an agreement, in If the agreed rate were higher than 12%, this would be annulled by law.
The last change to this legislation was in 1946, in which the legal interest on money was set at 4%. Subsequently, as soon as the protectorate of Morocco ceased to have special treatment and it became legislated by the same law that was in force in the rest of Spain.
Interest on tax delay and commercial delay
There are two types of late payment interest, the tax and the commercial. Both have different reasons for existing and therefore different conditions in the payment of the individual to the lender; to better understand them, let's analyze both independently.
Starting with the interest on tax arrears, an amount that is established in operations involving individuals, companies and public bodies. This interest rate is directly related to the tax agency, and is the equivalent benefit that is required as payment to taxpayers.
In a simpler way we can define that this is a payment that we must make to the tax agency due to the collection of an amount due to the delay in the payment of a debt.
Now, commercial late payment interest a legal order is regulated, which was ruled by the European Parliament and the Council. This regulates matters in which operations concentrated between companies are involved, so that there are no individuals involved. It also regulates the situations in which public administrations are involved. This matter has greater depth in all its regulations.
Let's start with the fact that the term to make payments is limited to a period of 60 days, and this cannot be extended under any circumstances. In addition to that the period of time that contemplates the 60 days begins not when the invoice is received, but with the receipt of the goods or materials.
Other issues that are regulated are the grouping of invoices in order to be able to make a single payment, among others. In these cases, the transactions are mainly based on the responsibility of the customer to settle a purchase made to another company.
Taking all this into account is very important, although the best thing will always be not to exceed the payment times.