Based on the financial function theory, finance possesses six different functions, including resources allocation, floating of loan, information providing, means of payment, incentive mechanism as well as risk control. Compared with the status quo of China’s private lending, the resource allocation function is still not significant confined to the geographical and habits factors. The information providing function is working without necessary accuracy, and may easily lead to moral hazard. The incentive mechanism function tends to alienate from originally normal incentive to a tool encouraging greed because of the unlimited rise of human lust Virtually nothing could be witnessed in terms of the function of means of payment and the role of risk control. To better achieve the functions of finance, legislation needs to play a more active role in the points hereinafter: defining the accession conditions for the market players to give some institutes the subject status, managing interest rate and suppressing usury firmly, defining legal responsibility to every kind of illegal private lending clearly, as well as encouraging the sector to self-discipline .