Loan sharking means an illegal form of lending. When applying for this kind of loan, people will not enjoy protection from the law. So, how does the law handle the sharking loan? In this article, LSX legal firm would like to provide you with information to answer the question: “How to calculate loan shark interest rate in Vietnam?”
Legal grounds
- Civil Code 2015
- Decree 01/2021/ND-CP
- Criminal Code 2015
The current maximum loan interest rate
According to Article 468 of the Civil Code 2015:
“Article 478. Interest rates
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 the National Assembly shall adjust the above interest and send a 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.”
Accordingly, the lending interest rate agreed by the parties must not exceed 20%/year of the loan amount.
How to calculate the loan shark interest rate?
The calculation of usury interest based on the amount borrowed with a simple and easy-to-understand calculation method. Interest will be calculated on a daily basis on the outstanding balance of VND 1,000,000.
For example, a loan shark with an allowance of 5 million VND charges interest of 2,000 VND per 1 million VND.
2,000 VND / 1 million x 5 = 10,000 VND / day for the total amount of 1 day interest.
In fact, there is not any formula for calculating usury rates, all calculations of gangsters are spontaneous. If anyone lends more than 20% interest per year, the law will consider it a loan shark. The formula to calculate the loan interest rate according to the standard day of the bank: DAY INTEREST = ACTUAL BALANCE X INTEREST RATE/365.
The formula for calculating usury interest: Total 1 day interest = Interest / 1,000,000 VND
Penalties for usury under the Criminal Code 2015
Article 201. Usury in civil transactions
Any person who offers loans at an interest rate that is five times higher than the maximum interest rate specified in the Civil Code and earns an illegal profit of from VND 30,000,000 to under VND 100,000,000 or previously incurred a civil penalty or has a previous conviction for the same offense which has not been expunged shall be liable to a fine of from VND 50,000,000 to VND 200,000,000 or face a penalty of up to 03 years’ community sentence.
If the illegal profit is VND 100,000,000 or over, the offender shall be liable to a fine of from VND 200,000,000 to VND 1,000,000,000 or face a penalty of 06 – 36 months’ imprisonment.
The offender might also be liable to a fine of from VND 30,000,000 to VND 100,000,000, and be prohibited from holding certain positions or doing certain works for 01 – 05 years.
Accordingly, the penalty level for usury in civil transactions:
- A fine of between VND 50-200 million or non-custodial reform for up to 3 years for the crime of usury as above.
- A fine of between VND 200 million and VND 1 billion or imprisonment from 6 months to 3 years if committing the crime and earning illegal profits of VND 100 million or more.
- Besides, the offender may subject to an additional penalty of a fine of from VND 30 to 100 million, a ban from holding certain posts, practicing certain professions, or doing certain jobs from 1 to 5 years.
How will the proceeds from usury be handled?
Article 5 of Resolution 01/2021/NQ-HDTP stipulates the handling of objects and money directly related to this crime as follows:
Confiscate for state funds to:
- Currencies and other assets used for lending loans;
- The interest corresponds to the highest interest rate as prescribed by the Civil Code that the offender has collected from the borrower.
- Money and other property that the offender has gained from the use of profits and other illegal revenues.
Return to the borrower the illicit profits that the offender has actually collected, unless the borrower uses the loan for illegal purposes such as gambling, illegal drug trading, fraudulent appropriation of property, etc. For these acts, the illicit profits will be confiscated to the state fund.
On the other hand, Article 6 Resolution 01/2021/NQ-HDTP stipulates:
Article 6 Resolution 01/2021/NQ-HDTP
1. In case the loan term has expired as agreed, the amount of illicit profits used to determine criminal liability includes interest and other illegal proceeds that the borrower must pay to the lender after deducting the loan amount corresponding to the highest interest rate prescribed by the Civil Code during the entire loan term.
2. In case the loan term has not expired but is detected, the amount of illicit profit used to determine criminal liability includes interest and other illegal proceeds that the borrower must pay to the lender after deducting the interest corresponding to the highest interest rate prescribed by the Civil Code in the time the competent authority detects and shuts it down.
Where the borrower has paid interest before the due date and other illegal revenues, the amount of illicit profits used to determine criminal liability includes interest and other illegal proceeds that the borrower actually paid to the lender after deducting the interest corresponding to the highest interest rate prescribed by the Civil Code.”
Legal service of LSX Legal Firm
LSX legal firm provides legal services to clients in various legal areas. To make your case convenient, LSX will perform:
- Legal advice related to new regulations;
- Representing in drafting and editing documents;
- We commit the papers to be valid, and legal for use in all cases;
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With a team of experienced, reputable, and professional consultants; The firm is always ready to support and work with clients to solve legal difficulties.
Furthermore, using our service, you do not need to do the paperwork yourself; We guarantee to help you prepare documents effectively and legally.
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After all, LSX provides the service with the desire that customers can experience it the best way. Additionally, we guarantee the cost to be the most suitable and economical for customers.
Contact LSX
Finally, hope this article is useful for you to answer the question about “How to calculate loan shark interest rate in Vietnam?”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: hoangson@lsx.vn
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Related questions
Contract for the loan of property means an agreement between parties whereby a lender delivers property to a borrower. When the loan falls due, the borrower must repay the lender property of the same type in accordance with the correct quantity and quality, and must pay interest if so agreed or so provided by law.
The property loan contract has an agreement on the interest rate; interest on overdue principal; interest on overdue interest debt higher than the interest rate; interest on overdue principal; interest on overdue interest debt is prescribed by law, the interest rate, interest on overdue principal debt; then it has no effect.
According to Article 465 of the Civil Code, obligations of lenders include:
1. Deliver the property to the borrower in full, strictly in accordance with the quality and quantity, and at the time and place, agreed.
2. Compensate the borrower for any damage where the lender knows that the property is not of the agreed quality but fails to notify the borrower, unless the borrower accepts the property with knowledge that the property is not of the agreed quality.
3. Do not demand the borrower to return the property prior to the due date, except in the cases provided in article 470 of this Code or relevant laws.
Conclusion: So the above is How to calculate loan shark interest rate in Vietnam?. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
