How much loan interest rate can a lender charge a borrower?

The loan interest rate is prescribed in Article 468 of Civil Code 2015. Accordingly, the loan interest rate is agreed upon by the parties. However, despite the agreement, the Civil Code has limited that maximum interest rate per year can not be exceed 20% of the loan".

Theo đó, lãi suất cho vay hàng tháng không được vượt quá 1,67%. Nếu lãi suất theo thỏa thuận vượt quá lãi suất giới hạn đã nêu ở trên thì mức lãi suất vượt quá đấy sẽ không có hiệu lực.Accordingly, the monthly interest rate cannot exceed 1.67%. If the negotiated interest rate exceeds the rate limit stated above, that excess interest rate will have no effect.

Simultaneously, if the two parties only  meet an agreement on the interest payment but not exact interest rate and there is a dispute about the interest rate then, the interest rate will be 50% of the highest interest rate at the time of debt payment.

Specially, in Article 201 of Criminal Code 2015, amended and supplemented in 2017, any people who charge interest rate from 05 times higher than the highest interest rate or receive illicit profit from 30-100 million must spend upto 3 years on probation. 

Based on the above provisions, the interest rate per month from 8.33% / month or more will be considered as "usury".

When borrowers are charged a high interest rate, what should they do?

As above analyses, if two parties lend with interest rate exceeding 20% per year, the excess of interest will be invalid. This is also prescribed in Article 9 of Resolution 01/2019 of the Judicial Council of the Supreme People's Court:

A property loan contract with an agreement on interest rate, interest on overdue principal, interest on overdue interest higher than the interest rate, interest on overdue principal, interest on overdue interest as prescribed by law. Interest rates, interests on overdue principals and interests on overdue interest are invalid

Therefore, parties can file a lawsuit asking the Court to declare that the  exceeded interest rate is invalid. This is based on article 123 of Civil Code 2015: "Any civil transactions on purpose and content that violate prohibitions of the law or social morality will be invalid."

Accordingly, in order to sue, the borrower must fully prepare the following papers:

- Lawsuit petition 

- Copy of loan agreement, loan note ...

- Authenticated copy of identity papers such as identity card, passport, citizenship identification, household registration book ... of the petitioner, the defendant, the person having related interests and obligations ...

- Other documents and evidences.

After preparing all above documents, the petitioner can submit to competent Court directly, send by post or via web portal of the court (if any).

Source: Luat Viet Nam