What is maximum loan interest rate in 2024 in Vietnam?

What is maximum loan interest rate in 2024 in Vietnam?

In Clause 1, Article 468 of the 2015 Civil Code, there are regulations on interest rates as follows:

Interest rate

1. The rate of interest for a loan shall be as agreed by the parties.

The rate of interest for a loan agreed by the parties may not exceed 20% per year, unless otherwise prescribed by law. According to actual conditions and at the proposal of the Government, the Standing Committee of National Assembly shall adjust the above interest and send report to the National Assembly at the latest session.

If the agreed interest exceeds the maximum interest prescribed in this Clause, the agreed interest shall become invalid.

2. Where parties agree that interest will be payable but fail to specify the interest rate, or where there is a dispute as to the interest rate, the interest rate for the duration of the loan shall equal 50% of the maximum interest prescribed in Clause 1 of this Article at the repayment time.

Thus, the maximum loan interest rate in 2024 cannot exceed 20%/year of the loan amount, unless other relevant laws stipulate otherwise in Vietnam.

What is maximum loan interest rate in 2024 in Vietnam? (Image from the Internet)

How much is penalty for lending beyond the maximum loan interest rate in Vietnam?

At Point d, Clause 4, Article 12 of Decree 144/2021/ND-CP regulates lending behavior exceeding the limit interest rate as follows:

Violations against regulations on management of business lines subject to security and order conditions

...

4. A fine ranging from 10.000.000 VND to 20.000.000 VND shall be imposed for any of the following violations:

a) Operating in a business line subject to security and order conditions without the certificate of security and order or during suspension thereof;

b) Irresponsibility that leads to threats to security and order, violations of law, acts that are contrary to fine traditions and ethics at the business establishment directly under their management;

c) Producing seals of organizations or state officials before having the seal design transfer note of the seal design registry as prescribed by law;

d) Running a pawn business with the interest rate exceeds that specified in the Civil Code;

dd) Failure to apply for registration of the business line subject to security and order conditions that involves grant of secured loans with interest rate exceeds that specified in the Civil Code;

e) Failure to preserve the pledged property or preserving pledged property at a location other than that registered with the competent authority;

g) Providing security guard services for illegal subjects, targets or activities;

h) Failure to include sufficient information about the customers in the logbook and failure to retain copies of ID papers of customers of the casino or establishment providing electronic prize-winning games for foreigners;

i) Buying, selling, importing goods, products that are military clothing or military equipment without retention of adequate documents as prescribed by law;

k) Selling or providing military clothing or military equipment for subjects have not obtain a license or written approval from a competent authority.

...

6. Additional penalties:

c) 3 - 6 months suspension of the license, practicing certificate, certificate of security and order in case of violations specified in Point e Clause 3 and Points c, e and g Clause 4 of this Article;

b) 6 – 9 months suspension of the license, practicing certificate, certificate of security and order in case of violations specified in Points h and q Clause 3; Point d Clause 4 and Clause 5 of this Article;

c) Suspension of operation for 06 – 09 months in case of violations specified in Point q Clause 3; Point a Clause 4 of this Article;

d) Confiscation of the exhibits and means of administrative violations in case of violations specified Points b, c, h, m, n and r Clause 3; Points c and k Clause 4, and Points b, dd and e Clause 5 of this Article;

dd) Expulsion of foreigners committing the violations specified in Clauses 3, 4 and 5 of this Article.

7. Remedial measures:

a) Mandatory return of the illegal profits earned from commission of the administrative violations specified in Points dd, i, k, l, m, n and r Clause 3; Points d, dd and k Clause 4 and Point b Clause 5 of this Article;

b) Mandatory return of the certificate of security and order or certificate of security guard training in case of violations specified in Point d Clause 3 of this Article.

Thus, individuals whose lending behavior exceeds the maximum lending interest rate will be fined from 10,000,000 VND to 20,000,000 VND in Vietnam.

The above fine level applies to individuals. As for organizations that commit violations, they will be fined twice the amount of fines for individuals (Clause 2, Article 4, Decree 144/2021/ND-CP).

If the agreed interest rate is higher than the limit interest rate, is the excess interest rate valid in Vietnam?

Article 9 of Resolution 01/2019/NQ-HDTP regulates settling agreements on interest and interest rate which are higher than the ones regulated by laws as follows:

Settling agreements on interest and interest rate which are higher than the ones regulated by laws

If a property loan agreement stipulates an interest/ interest rate on the overdue principal, and the interest on unpaid interest amount higher than the ones regulated by laws, the exceeding interest/interest rate on the overdue principal, and the interest on unpaid interest amount shall be not effective; the overpaid interests shall be deducted from the outstanding principal at the interest payment date; the overpaid interests that remain after deduction of the outstanding principal shall be refunded to the borrower.

Thus, if the agreed interest rate is higher than the limit interest rate, the excess interest rate will not be effective in Vietnam.

Best regards!