The Civil Code (BLDS) 2015, set to take effect on January 1, 2017, replacing the BLDS 2005, addresses many new and specific regulations, creating favorable conditions for civil transactions to take place more conveniently. Among these, the issue of interest rates, an indispensable component of asset loan contracts, must be mentioned.
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Interest rates are the rate at which interest is paid by borrowers for the use of money that they borrow from lenders. Interest rates are expressed as a percentage of the principal for a certain period of time (usually calculated annually).
In asset loan contract relationships, Civil Code 2005 stipulates:
1. Loan interest rates are agreed upon by the parties but must not exceed 150% of the basic interest rate announced by the State Bank for corresponding loans.
However, Civil Code 2015 has adjusted the maximum level of interest rates agreed upon by the parties as follows:
1. Loan interest rates are agreed upon by the parties. In cases where the parties agree on the interest rate, the agreed interest rate must not exceed 20% per year of the loan amount, except where other related laws provide otherwise...
It can be seen that this interest rate is more specific and no longer depends on the basic interest rate of the State Bank as stipulated in Civil Code 2005.
Civil Code 2015 states clearly: In cases where the agreed interest rate exceeds the limit specified in this clause, the excess interest rate will not be effective. Thus, borrowers and lenders need to pay attention to the maximum interest rate limit not exceeding 20% per year (equivalent to 1.7% per month).
When considering the basic interest rate announced by the State Bank in Decision 2868/QD-NHNN on November 29, 2010, the basic interest rate is 9% per year, equivalent to 0.75% per month. The interest rate according to Civil Code 2005 is not more than 150% of the basic interest rate of the bank, that is, not more than 13.5% per year (equivalent to 1.125% per month).
Comparing the interest rate regulations between Civil Code 2005 and Civil Code 2015, it is clear that the maximum interest rate limit under Civil Code 2015 has been expanded. This expansion of the interest rate limit brings many conveniences when establishing asset loan contracts: it is transparent, clear, and easy to apply; parties entering into asset loan transactions can immediately know the legal consequences when signing and performing the contract; it is suitable for the current economic and social situation, and limits the situation of heavy interest lending.
Furthermore, Civil Code 2015 clearly states that if the parties agree on paying interest but do not specify the interest rate and there is a dispute over the interest rate, the interest rate will be determined as 50% of the limit rate (20% per year) at the time of debt repayment; different from the regulation in Civil Code 2005 which applies the basic interest rate announced by the State Bank corresponding to the loan term at the time of debt repayment.
