Interest Rate Restriction Law

INTEREST RATE RESTRICTION LAW(“risoku seigen ho”, also referred to as the Interest Control Law)
Law No. 100, Enacted 15 May 1954
(Unofficial translation*)

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Article 1
If the contracted interest rate applicable to moneys which a creditor receives in connection with the pecuniary loan for consumption exceeds the rates of interest prescribed below, the portion in excess shall be deemed invalid.
Where the principal is less than 100,000 yen: 20% per annum;
Where the principal is 100,000 yen or more but less than 1,000,000 yen: 18% per annum;
Where the principal is 1,000,000 yen or more: 15% per annum.
Notwithstanding the provisions of the preceding paragraph, a debtor shall not be entitled to refund of the portion in excess should such payment be made voluntarily.

Article 2
In the case where interest has been deducted from the loan, if, assuming the sum received by the debtor is principal, the sum deducted is in excess of the amount calculated at the rate of interest prescribed in paragraph 1 of the preceding Article 1, the portion in excess shall be deemed to have been appropriated to the payment of principal.

Article 3
For the purpose of application of the provisions of the preceding two Articles, moneys other than the principal which a creditor receives in connection with the pecuniary loan for consumption shall be deemed to be interests, regardless of whether they are received as fees, discount charges, commissions, investigation charges or otherwise under whatever name they may be charged; provided, however, that this shall not apply to the expenses of the execution of the contract or of performing obligations.

Article 4

As for the determination in advance of the amount of compensation for damages on account of failure to perform obligations in connection with the pecuniary loan for consumption, if the ratio of the amount of compensation for damages to the principal exceeds two times the rates prescribed in Article 1 paragraph 1, the portion in excess shall be deemed invalid.
The provisions of Article 1 paragraph 2 shall apply mutatis mutandis in cases where the debtor voluntarily paid the portion in excess referred to in the preceding paragraph.
For the purposes of application of the provisions of the preceding two paragraphs, the penalties shall be deemed to be the predetermined amount of compensation for damages.

* An unofficial translation
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