When having difficulty in getting a bank loan, businesses often borrow money from individuals or other businesses, leading to many risks for both parties because they do not understand the provisions of the loan contract.
Civil Code No. 33/2005/QH11 ( BLDS 2005 ) is being implemented, will be replaced by Civil Code No. 91/2015/QH13 ( BLDS 2015 ) effective from January 1, 2017.
Basically, civil law respects the freedom of agreement of the parties in a contract, but the parties must follow the general provisions of the law. Accordingly, although lending is an irregular activity of enterprises, it brings many legal and commercial risks to enterprises.
Here are the new things businesses need to note in signing loan contracts, according to the provisions of the Civil Code 2015:
- Interest is not required
Some businesses misunderstand that loan contracts must have interest rates, leading to the fear of borrowing money from partners or customers. However, whether there is interest or not depends on the agreement of the parties when borrowing money, so businesses can completely sign an interest-free loan contract.
- Negotiate the loan interest rate within the limit
If the parties agree on the loan interest rate, this interest rate is limited. Enterprises note that the loan interest rate limit is subject to change in the provisions of the law.
- According to the 2005 Civil Code, the loan interest rate shall be agreed upon by the parties, but must not exceed 150% of the basic interest rate announced by the State Bank for the respective loan type. Determining the ceiling interest rate is quite complicated for businesses, leading to the parties often agreeing that the interest rate is too high or too low.
- According to the 2015 Civil Code, if the parties have an agreement on the interest rate, the agreed interest rate must not exceed 20%/year of the loan amount. As can be seen, the interest rate increased much compared to the old regulations; Therefore, depending on the financial ability and level of trust between the parties, enterprises need to carefully consider the loan interest rate in the loan contract.
The new regulation also adds sanctions in case the agreed interest rate exceeds 20%/year, this interest rate will not take effect, and the parties will apply the interest rate within the limits set by the law.
- Late payment of interest is mandatory
When the lending business has no interest, it is mainly the support and help of the lender with the borrower, so it is rare for the parties to agree on the payment of interest on the late payment debt when it is due. However, the parties should also note that even if there is no agreement, the law still has provisions for the amount of late payment, in case the loan has no interest:
- According to the 2005 Civil Code, if there is no agreement, the borrower does not have to pay interest on the late payment.
- According to the 2015 Civil Code, when the borrower fails to pay the debt or fails to pay in full, the lender has the right to demand interest at the interest rate of 10% (determined by 50% of the limit interest rate).
- The agreed rate of late payment interest applies
In the case of a profitable lending business, the legal regulations change in favor of the money lender, specifically as follows:
– According to the 2005 Civil Code, even though the parties have agreed on the late payment interest rate, the basic interest rate announced by the State Bank will still apply according to the loan term at the time of debt repayment. According to the 2015 Civil Code, when the borrower fails to pay or fails to pay in full, the borrower must pay interest at the loan interest rate in the contract, not at the basic interest rate like the 2005 Civil Code:
- Interest on the principal is at the rate agreed upon in the contract corresponding to the loan term but has not been paid yet. In case of late payment, interest must be paid at the rate of 10% (determined by 50% of the limit interest rate). term).
- If there is no agreement, the interest on the unpaid overdue principal is 150% of the loan interest rate according to the contract corresponding to the late payment period.
– It can be seen that the interest payable by the borrower under the 2015 Civil Code is larger than the old regulation because the agreed interest rate is usually higher than the basic interest rate of the State Bank.
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