Persons under 18 years old allowed to borrow from the bank? What are the conditions for the Bank's loan approval?
What are the conditions for taking a bank loan?
According to Article 7 of Circular 39/2016/TT-NHNN, credit institutions consider and decide to lend when the customer meets the following conditions:
- The customer is a legal entity with civil legal capacity as prescribed by law. The customer is an individual of 18 years of age or older with full civil act capacity as prescribed by law or from 15 years of age to under 18 years of age without losing or restricting civil act capacity as prescribed by law.
- The loan needs to be used for legal purposes.
- There is a feasible capital use plan.
- The customer has the financial capacity to repay the loan.
- In the case of customers borrowing from credit institutions at loan interest rates prescribed in Clause 2, Article 13 of Circular 39/2016/TT-NHNN, the customer must be assessed by the credit institution as having transparent and healthy financial conditions.
Thus, individuals from 15 years of age to under 18 years of age who do not lose or restrict civil act capacity as prescribed by law and meet all the conditions regarding loan needs, capital use plans, and financial capacity to repay the loan will be eligible to take bank loans.
Can people under 18 years old take bank loans? What are the conditions for banks to decide on lending?
In which cases are bank loans not allowed?
According to Article 8 of Circular 39/2016/TT-NHNN, some terms have been corrected by Clause 1, Clause 2, Clause 3, Article 1 of Decision 312/QD-NHNN in 2017; the following cases are not eligible for loans:
- To carry out investment and business activities in industries where the law prohibits investment and business activities.
- To pay costs or meet financial needs for transactions or acts that are prohibited by law.
- To purchase or use goods and services in industries where the law prohibits investment and business.
- To buy gold bars.
- To repay credit facilities from the same lending credit institution, except for loans to pay interest arising from the construction of projects, where the interest costs are included in the total investment approved by the competent authority according to the law.
- To repay credit facilities from other credit institutions and repay foreign loans, except for loans to repay early repayment loans that meet all the following conditions:
+ The loan is for business activities;+ The loan term does not exceed the remaining term of the old loan;+ The loan has not been restructured.
Under what circumstances is the bank loan interest rate controlled?
According to Clause 2, Article 13 of Circular 39/2018/TT-NHNN, the bank loan interest rate will be controlled as follows:
Loan Interest Rate
1. Credit institutions and customers agree on the loan interest rate based on market capital supply and demand, loan demand, and customer creditworthiness, except where the State Bank of Vietnam stipulates a maximum loan interest rate in Clause 2 of this Article.
2. Credit institutions and customers agree on short-term loan interest rates in VND but not exceeding the maximum loan interest rate decided by the Governor of the State Bank of Vietnam periodically to meet certain capital needs:
a) Servicing the agricultural, rural development sector per the regulations of the Government of Vietnam regarding credit policies for agricultural and rural development;
b) Executing business plans for export goods under the Law on Commerce and its guiding documents;
c) Serving the business operations of small and medium enterprises as per the Government of Vietnam's policies on supporting small and medium enterprise development;
d) Developing the supporting industry per the Government of Vietnam's policies on the development of the supporting industry;
e) Serving the business operations of high-tech enterprises under the Law on High Technology and its guiding documents.
3. The agreement on the loan interest rate includes the loan interest rate and the method of interest calculation for the loan. If the loan interest rate is not converted to a percentage per annum and/or the interest calculation method is not based on the actual loan principal balance and the actual duration of the loan principal balance, the loan agreement must include the converted interest rate in percent per annum (one year is 365 days) based on the actual loan principal balance and the actual duration of the loan principal balance.
4. When the due date arrives and the customer fails to pay or pays insufficiently the principal and/or interest as agreed, the customer must pay interest as follows:
a) Interest on the principal at the agreed loan interest rate corresponding to the loan term that has reached its due date but has not been paid;
b) If the customer fails to pay the interest on time as stipulated in point a of this clause, the customer must pay late payment interest at a rate agreed upon by the credit institution and the customer but not exceeding 10% per annum on the overdue interest amount for the corresponding overdue period;
c) If the loan is converted to overdue debt, the customer must pay interest on the overdue principal balance corresponding to the overdue period, with the interest rate not exceeding 150% of the in-term loan interest rate at the time of loan conversion to overdue debt.
5. In the case of applying an adjustable loan interest rate, the credit institution and the customer must agree on the principles and factors for determining the adjustable interest rate, and the timing for adjusting the loan interest rate. If the factors for determining the adjustable interest rate result in multiple loan interest rates, the credit institution shall apply the lowest loan interest rate.
Hence, Credit institutions and customers agree on short-term loan interest rates in VND, but not exceeding the maximum loan interest rate decided by the Governor of the State Bank of Vietnam periodically to meet certain capital needs:
- Serving the agricultural, rural development sector per the regulations of the Government of Vietnam regarding credit policies for agricultural and rural development;
- Executing business plans for export goods under the Law on Commerce and its guiding documents;
- Serving the business operations of small and medium enterprises as per the Government of Vietnam's policies on supporting small and medium enterprise development;
- Developing the supporting industry per the Government of Vietnam's policies on the development of the supporting industry;
- Serving the business operations of high-tech enterprises under the Law on High Technology and its guiding documents.
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