HÃNG LUẬT DHP

ASK

Currently I need money to invest in a project and want to borrow 1 billion VND from my friend. Please advise me what is the reasonable rate of interest according to the law?

ANSWER

DHP LAW would like to answer your questions as follows:

Article 468 of the 2015 Civil Code regulates interest rates as follows:

“first. The interest rate of the loan shall be agreed upon by the parties.

If the parties have an agreement on the interest rate, the agreed interest rate must not exceed 20%/year of the loan amount, unless otherwise provided for by other relevant laws. Based on the actual situation and at the proposal of the Government, the National Assembly Standing Committee shall decide to adjust the above-mentioned interest rates and report to the National Assembly at the nearest meeting.

In case the agreed interest rate exceeds the limit interest rate specified in this Clause, the excess interest rate will not take effect.

2. Where the parties have an agreement on interest payment, but the interest rate is not clearly defined and there is a dispute over the interest rate, the interest rate shall be determined equal to 50% of the limit interest rate specified in Clause 1 of this Article at time of payment”.

Accordingly, the loan interest rate is agreed upon by the parties themselves, if the loan is profitable, the agreed interest rate must not exceed 20%/year of the loan amount, unless otherwise provided for by law.

Also according to the provisions of Clause 1, Article 468 of the Civil Code 2015, clearly stipulating that in case the agreed-upon interest rate exceeds the limit interest rate specified in this Clause, the excess interest rate will not take effect. Thus, the maximum interest rate in property loan contracts agreed between the parties under the Civil Code 2015 is not more than 20%/year (ie 1.7%/month). You should base on the above provisions to be able to negotiate a reasonable interest rate, in accordance with the law.

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