A bank granted a loan to another company, which signed promissory notes with interest rates freely set by the lender and secured by a mortgage guarantee. The bank assumed that, because the borrower was another company, the rate would not be challenged. The Mexican Supreme Court has now confirmed that a judge may reduce it without the need to be asked by any of the parties.
This issue was analyzed by the Court when resolving constitutional trials (Direct Amparo Trials in Review 6495 and 6496, both from 2025). In the case at hand, a bank filed two commercial summary proceedings against a company and its co-obligors to collect on loans. The courts ruled in favor of the bank and ordered payment of the claimed amounts with ordinary and/or past-due interest.
The company and its co-obligors argued that the interest accrued by the loan was disproportionate in relation to the principal and that the courts did not consider the standards that protect debtors against usurious rates. This was because the debtor was not an individual but a commercial entity.
When the case reached the Supreme Court, it determined that even though interest rates agreed by banking institutions are presumed not to be usurious, the judge must examine whether the rate is abusive, even if the debtor does not request it, and, if applicable, reduce it prudently.
To do so, the judge must take into account factors such as the nature of the parties, the legal relationship, the amount and term of the loan, whether collateral exists, and the conditions of the financial market.
The Court stated that the standard of protection against abusive or usurious rates should not be reduced if the debtor is a commercial entity rather than an individual, since companies are also holders of the right to property protected by Mexico’s Federal Constitution and the American Convention on Human Rights.
Although this case arose from a loan granted by a bank, the standard of protection against usury endorsed by the Court applies to any type of creditor.
Therefore, if your company grants credit to its clients by agreeing on ordinary and/or past-due interest and documents those obligations with pledges, mortgages, and promissory notes, it is important to consider that a judge may review the rates agreed.
This could have an impact on your company’s cash flow management, so it is advisable to ensure that agreed rates are reasonable and justified according to market conditions at the time of contracting.