Currently, many Clients are interested in issues related to loan agreements. Understanding that requirement, NPLaw would like to send the Clients the issues related to loan agreements in accordance with the provisions of Vietnamese law.
A loan agreement is an agreement kind of property loan agreement under Article 463 of the Civil Code 2015. Accordingly, a loan agreement is an agreement between the parties, in which the lender assigns capital as money to the borrower, and when it is the due borrower must repay the lender the amount in the right amount, quality, and interest payment if agreed or under the law.
Common loan agreements
An installment agreement is a loan form where the Clients will pay off little by little the principal and interest monthly instead of having to pay it off 01 time.
For example, the Client expects to buy a house for 2,000,000,000 (two billion) dong. The Clients have the amount of 1,000,000,000 (one billion) dong available. Instead of paying the entire 2,000,000,000 (two billion) dong when buying the house. The Clients decide to take out an installment loan of 1,000,000,000 (one billion) dong within 12 months with an interest rate of 12% / year.
The company may loan capital from individuals and other companies at the interest rate agreed upon by the parties but not exceeding 20% per year of the loan amount, unless otherwise provided for by other relevant laws.
The loan agreement between the company and the individuals has the following contents:
An unsecured loan agreement is a loan agreement whereby the bank or financial company that is the lender assigns to the borrower an amount of money to use for specified purposes for a certain period of time as agreed upon on the principle of repayment of both principal and interest.
Therefore, it can be understood that when the agreement expires, the borrower must be obliged to return to the lender the amount equivalent to the borrowed money and pay an additional amount of interest as agreed.
Notices when signing a mortgage loan contract
Know your credit score
The credit score is the way the bank classifies you as a customer. If your credit score is low, your chances shall be rejected by the bank is certain. The simplest way to know whether you have a low credit score is to go back in time to see if you've ever missed more than 10 (ten) days on a debt, and if so, call the bank and ask directly.
Choose a bank
Different banks have different lending conditions. Filling out an application form on a website is a good way for them to classify your dossiers and send it to the appropriate bank. Registering online is a faster and more convenient way than going to the bank. You do not have to accept a compulsion when filling out the registration form, and it's the best way to compare before making a decision.
Understand interest rates correctly
The initial fixed and the descending interest rate are different in understanding and numbers. But in general, the amount to be paid is the same. In consumer credit contracts, banks often choose to write down interest rates, attributing them to fixed interest rates to be easier to understand.
Fees (fees other than interest)
Most unsecured loans have surcharges other than the interest payable. Check all “hidden fees” if any: Consultancy fees, dossier fees, appraisal fees... Some banks charge lower loan interest rates but charge higher surcharges. In such cases, you need to be sober to know the exact total cost of your loan. What seems like an attractive offer is a hidden fee.
You must be able to afford to repay the debt
Before receiving a consumer loan, you need to know your monthly payment capacity, define how much you have to pay that accounts for how many percentages of your monthly income, and whether you can pay it off and still normally live. When you know the amount to be paid and still have a guaranteed monthly repayment, contact your bank and tell them that reasonable number.
Settlement ahead of time (early repayment)
Banks will suffer if you repay your debt ahead of time. Banks often issue a percentage figure you have to pay extra if you proceed with the settlement ahead of time. Even so, you should also consider incurring this fee if you calculate the amount of interest that can be saved against the fee percentage you will pay.
Prepare all kinds of documents
A large number of unsecured loan requests are rejected by the bank every day because the borrower does not prepare the documents under the bank's requirement. Let’s follow the instructions and never submit “edited” documents to the bank.
An unsecured loan can not only pressure but also be the best way to solve problems that arise. Even though you feel you need the help of the lending bank, it is not, you are a consumer, and you have your rights. Let’s be knowledgeable and make the right choice!
According to the provisions of Article 3 of Decree 219/2013/ND-CP, a foreign loan is a borrower receiving credit from a non-resident through the signing and execution of foreign loan agreements in the form of loan agreements, deferred purchase and sale contracts, loan trust contracts, financial leasing contracts or issuance of debt instruments by the borrower.
Borrowers
Foreign direct investment enterprises:
If it is a medium-term, long-term loan, it must be transferred to the direct investment account of the enterprise, which can then be disbursed to the current account of the enterprise to make payments for the purpose of borrowing.
If it is a short-term loan, this loan is transferred to the direct investment capital account of the enterprise or the account of the enterprise used for the purpose of receiving loans and repaying short-term loans.
Enterprises without direct foreign investment: Foreign loans are transferred to loan accounts.
Project investment loan agreement
Under Clauses 2, 3 and 4, Article 69 of the 2014 Law on Housing, loans for project investment are made through the following forms:
Clause 2 Article 19 of Decree no. 99/2015/ND-CP on guiding the Law on Housing stipulates:
The investor must send a written request to the Department of Construction where the housing is located with documents proving that the house is eligible to be sold or leased for purchase as prescribed in Clause 1, Article 55 of the Law on Real Estate Business. In cases, there is a mortgage on the construction investment projects, or a residential mortgage be sold or rented and purchased, the investor must enclose a document proving the settlement or unified minutes of the buyer, the renters or tenants, and the mortgagee regarding not having to settle the mortgage and be bought and sold, renting and buying houses there. In case there is no mortgage for the project or mortgage of the houses to be sold or leased for purchase, the investor must clearly state the commitment to take responsibility in a written letter to the Department of Construction.
Therefore, the Clients should note that it is necessary to check the legal dossiers of projects that meet the regulations of law when the investors make loans from the Clients to avoid possible risks.
To buy land plots of projects, the Clients often loan capital in the form of mortgage loans. It is a traditional loan form of bank. In this loan form, the borrower must have property. The loan limit is pretty high, up to 80% – 120% of the value of pledged assets. The interest rate due is not too high and matches the loan. The loan term lasts up to 25 years, depending on the borrower’s needs. This form of loan is suitable for both businesses and individuals. An important note when taking out a mortgage is the enclosed fees, such as late fees or payment ahead of time that will sometimes be pretty high.
When the company wishes to loan shareholder capital, the company and shareholders must make a loan agreement at the interest rate agreed upon by the parties' agreement but not exceeding 20% / year. To loan capital, the shareholders need to meet the general meeting of shareholders about the loan amount, loan purpose, loan term, loan interest rate, rights and obligations of the parties... and make minutes of the general meeting of shareholders to have a basis for implementing the shareholders loan agreement, .
Borrowers:
Farmers’ Members of households voluntarily participate in the project of the group of loaning capital for production and business development under the direction and guidance of Farmers’ Associations at all levels.
Cooperative groups of Farmers' Members and Agricultural Cooperatives that have signed cooperation contracts or agreements with Farmers' Associations on supporting farmers, especially poor and near-poor households in the area to organize production and business, product consumption, job creation, income enhancement.
Other subjects when having the decision of the Central Standing Committee of the Vietnam Farmers’ Union.
Production of agriculture, forestry, fishery, matchmaking.
Development of business lines and handicrafts.
Processing and consumption of agricultural, forestry, fishery and salt products.
Trading in products and services for agricultural, forestry, fishery, matchmaking and farmer life.
Notes to avoid risks in the Loan Agreement
According to the law, the Loan Agreement can be made orally or in writing. However, in order to ensure the binding responsibilities of the parties and the interests of the parties, the Agreement should be made in writing.
Under the Civil Code 2015, the loan interest rate is agreed upon by the parties but does not exceed 20% / year. In case the agreed interest rate exceeds 20% / year, the excess interest rate does not take effect.
If the interest rate is 5 times the highest interest rate specified in the Civil Code, the lender may be criminally liable for lending heavy interest in civil transactions specified in Article 201 of the 2015 Criminal Code with imprisonment for up to 03 years.
In order to avoid the case that the borrower deliberately refuses to repay the loan, when lending (usually large sums of money), the lender should require the borrower to pledge and mortgage valuable assets in their possession to secure the loan.
For assets registered for ownership and use (such as cars, motorcycles or land use rights), the two parties need to make a mortgage contract and notarize the mortgage contract.
Decree No. 21/2021/ND-CP on the implementation of the Civil Code on security obligations, took effect from May 15, 2021, has allowed people to receive mortgages for land use rights instead of only credit institutions as before.
However, individual mortgage recipients must pay attention to the regulations on notarization and mortgage registration. When notarizing, the parties will be consulted by the notary, check the conditions for mortgaging the use right such as undisputed land, certificate or land use right still valid as well as guide the procedures for registration of collateral.
MONEY LOAN AGREEMENT
No.: ...../...../HĐ
(Registration number at NH/HTXTD: ...../.....)
Today, date.... month.... year...., At .................................... We include:
(If borrowing from banks and credit cooperatives, there is an additional element of considering the applicant's application).
LENDER (PARTY A): ..................
Address:........................................................................................................................
Telephone:........................................................... Fax:................................................
Tax ID:.......................................... Account No.:..............................
By Mr. (Mrs.): ......................... Date of birth: .....................................
Title:.................................................................................................. as representatives.
BORROWER (PARTY B): ........................
Address:........................................................................................................................
Telephone:........................................................... Fax:................................................
Tax ID:.......................................... Account No.:..............................
VND deposit account number: ................................ at the Bank: ........................................
Digital foreign currency deposit account: ............................ at the Bank: ........................................
By Mr. (Mrs.): ......................... Date of birth: .....................................
Title:.................................................................................................. as representatives.
After the agreement to sign a loan agreement together with the following terms:
Article 1: Subjects of the Contract
Party A agrees to lend party B the amount:
- By number: .........................
- In words: ..............................
Article 2: Loan term and method
2.1 Loan term is ..................... month
2.2 Loan method (the following methods can be selected):
Transferred to ......... phase
Article 3: Interest rate
3.1 Party B agrees to borrow the above amount at an interest rate ........... % one month from the date of receipt of the loan.
3.2 Interest is paid monthly on the 30th day from the date of borrowing, deferred interest is penalized ........ % month.
3.3 Before this contract expires..... day; if party B wishes to continue the extension, it must be agreed in advance at the location ........................
3.4 During the validity of the contract, there is no change in the loan interest rate agreed in this contract.
3.5 When the debt matures, party B does not pay enough capital and interest to party A, the total amount of missing capital and interest will go to the overdue debt, and bear interest calculated according to the overdue debt of ...... % a month.
3.6 The term of debt payment is not more than .... date if there is no other agreement of the two parties.
Article 4: Obligations of Party A
4.1 Deliver money to Party B in full, in the right quality and quantity at the agreed time and place;
4.2 Compensation for damage to Party B, if Party A knows that the property is not of good quality without notifying Party B, unless Party B knows and still receives that asset;
4.3 Party B must not be requested to return the property ahead of time, except for the case specified in Article 478 of the Civil Code 2005.
Article 5: Obligations of Party B
5.1 Party B must pay in full when due;
5.2 The place of repayment is the residence or headquarters of party B;
5.3 In case the loan has no interest but when it is due, party B does not pay the debt or does not pay it in full, party B must pay interest on the late payment debt at the basic interest rate announced by the State Bank corresponding to the late payment term at the time of debt repayment, if there is an agreement.
5.4 In case of an interest-bearing loan that party B does not pay or does not pay in full, party B must pay interest on the principal and overdue interest at the basic interest rate announced by the State Bank corresponding to the loan term at the time of repayment.
Article 6: Usage of borrowed money
The parties may agree that the loan money must be used for the correct purpose of borrowing; Party A has the right to check the use of the loan money and has the right to reclaim the loan money ahead of time, if it has been reminded that Party B still uses the loan money for the wrong purpose.
Article 7: Contractual security measures
7.1 Party B agrees to mortgage (or pledge) the property in its possession as ......... and hand over the entire original ownership certificate of the property to Party A (it is possible to ask someone else with the property to give the ownership document to the guarantee to party B). The introduction of assets to be secured has been attached by the two parties after the confirmation of the provincial State Notary Office ......................................................
7.2 Upon maturity, party B has paid all capital and interest to party A, this party will carry out mortgage clearance procedures (or pledge, guarantee) and hand over the original ownership certificate of the property secured to party B.
7.3 Party B agrees that, if it fails to pay on time as committed in this contract after .... on the date, Party A has the right to request the competent authority to issue a security to recover the overdue debt from Party B.
Article 8: Responsibility to pay expenses related to the contract
Expenses related to borrowing such as: collateral storage, insurance premiums, litigation fees, etc. party B is responsible for payment.
Article 9: General Commitments
9.1 The two parties undertake to fully comply with the terms of this contract, if other contents specified in the State law are not stated in this contract, the two parties should respectfully comply.
9.2 If a dispute arises, the two parties will resolve it by negotiation.
9.3 If the self-settlement is not satisfied, the two parties will refer the case to the Court ......................... where the borrower is located
Article 10.- Validity of agreements
This agreement is effective from the date ......... month........ year........ to date ... month... year...........
This agreement is made into ............. copies. Each party holds............ copy.
REPRESENTATIVE OF PARTY A REPRESENTATIVE OF PARTY B
Title
(Signed, stamped) (Signed, stamped)
According to the provisions of Circular no. 257/TT-BTC, the notarization fee of the loan contract is calculated based on the loan value.
The loan agreement is liquidated when the loan agreement is terminated. The liquidation of the Agreement may or may not make a liquidation record depending on the agreement of the parties
A loan agreement dispute occurs when the parties violate the obligations specified in the Agreement such as: Breaching of debt repayment obligations, payment terms, interest payments or any other violation that the breached party finds infringing on their rights and interests.
The above contents will help customers understand more about the loan agreement in accordance with the law of Vietnam. In fact, signing as well as assessing the risk in the Loan Agreement is not easy. Therefore, you should find a reputable law firm to help you solve the above legal problems, and we believe that we can do that for you. Please contact us for instructions according to the information below
NPLaw
Hotline: 0913449968
Email: legal@nplaw.vn
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