Determination of Interest and Interest Rates in Interest-Free Loan Agreements Where the Borrower Fails to Repay or Repays Incompletely Upon Maturity

The determination of interest and interest rates in interest-free loan contracts where the borrower fails to repay or makes insufficient payments at maturity is specified in Clause 2, Article 5 of Resolution 01/2019/NQ-HDTP. To be specific:

- Interest on overdue principal not yet paid is calculated according to the agreed interest rate but shall not exceed the interest rate specified in Clause 1, Article 468 of the Civil Code 2015, corresponding to the loan term without interest on the principal at the time of contract establishment. In case the parties agree on the payment of interest but do not clearly specify the interest rate and there is a dispute, the interest rate will be determined by 50% of the interest rate limit specified in Clause 1, Article 468 of the Civil Code 2015 at the time of repayment.

Interest on overdue principal not yet paid = (unpaid principal) x (agreed interest rate or 50% of the interest rate limit specified in Clause 1, Article 468 of the Civil Code 2015 at the time of repayment) x (loan term without interest on the principal).

- In case of late payment of interest on the overdue principal, interest on the unpaid interest according to the interest rate specified in Clause 2, Article 468 of the Civil Code 2015 at the time of repayment, corresponding to the time of late payment of interest on the principal, shall also be paid unless otherwise agreed.

Interest on unpaid interest = (unpaid interest) x (interest rate specified in Clause 2, Article 468 of the Civil Code 2015 at the time of repayment) x (time of late payment of interest on the principal);

- Interest on the overdue principal not yet paid is calculated at 150% of the loan interest rate agreed upon by the parties in the contract, corresponding to the time of late repayment, unless otherwise agreed. The interest rate on overdue principal agreed upon by the parties shall not exceed 150% of the interest rate specified in Clause 1, Article 468 of the Civil Code 2015.

Interest on overdue principal not yet paid = (overdue principal not yet paid) x (interest rate agreed upon by the parties or 150% of the loan interest rate agreed upon by the parties) x (time of late repayment of principal).

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