Currently, the form of lending through applications (apps) is appearing more and more. However, the majority of loan applications are not reputable. In many cases, the “app” advertises non-interest, or low-interest loans but after borrowers complete the procedures, they find that the loan’s interest rate is up to 10-20%/month and the repayment period is short. This makes borrowers quickly lose the ability to pay the debt and the current debt is many times larger than the original debt. Be threatened, texted, called to urge debt, posted untruthful information on social networks, this affects not only themselves but also those who know borrowers. When the borrower “accidentally” borrowed money through “app”, what should the borrower do?
1. Be aware before borrowing money through “app”
In all circumstances, prevention always takes precedence over resolving and overcoming consequences.
Before borrowing money through “app”, the borrower should thoroughly research the loan app including the company or individual that owns the app; online comments and reviews about the app that borrowers intend to borrow; limits, interest rates, procedures of loan.
In case the borrower cannot find information about the loan app or the information is unclear, the evaluation of the app is not high, there are signs of fraud or loaning with high-interest rate, the borrower should not borrow money through that app.
According to Article 468 of the Civil Code, if the parties have an agreement on the loan interest rate, the interest rate must not exceed 20%/year of the loan amount, unless otherwise specified by other relevant laws. If the parties have an agreement on interest payment but do not specify the interest rate, the interest rate is determined at 10%/year. In the case of a loan without interest but when due, the borrower does not repay or does not pay in full, the lender has the right to demand interest at the rate of 10%/year on the amount of late payment corresponding to the period of delay. The borrower should be careful when the application’s loan interest rate exceeds the rate specified in the Civil Code.
2. In case the borrower “accidentally” borrowed money through “app”, what should the borrower do?
There are some cases when the borrower researched, the loan app advertised non–interest or low-interest loans. But after the borrower completed the procedures, the information about the interest rate and repayment period has changed. The interest rate increases up to 10-20%/month and repayment period is within a few days.
In this situation, TNTP advises borrowers not to use this amount and should immediately refund the debt borrowed through the app on time to avoid arising additional interest.
In case the borrower has used the money and is no longer able to pay due to high-interest rate and the current debt is many times larger than the original debt, the borrower should stop paying principal, interest and denounce the Crime of lending heavy interest in civil transactions specified in Article 201 of the Penal Code 2015 (amended and supplemented in 2017): “Any person in a civil transaction who lends at an interest rate 5 times or more than the highest interest rate specified in the Civil Code, obtain an illegal profit of between 30,000,000 dong and under 100,000,000 dong or has been administratively sanctioned for this act or has been convicted of this crime, has not yet had criminal records remitted but continues to commit it, shall be subject to a fine of between 50,000,000 dong and 200,000,000 dong or non-custodial reform up to 3 years”.
Accordingly, the highest interest rate prescribed in the Civil Code is 20%/year. The interest rate that as 5 times as the highest rate is 100%/year, equivalent to 8.3%/month. Any application that lends at an interest rate of 8.3%/month or more and obtains an illegal profit of 30,000,000 dong or more (the money obtained from applying high-interest rate) shows signs of constitutes the Crime of lending heavy interest in civil transactions.
Above are the sharing and instructions of TNTP in case the borrower “accidentally” borrowed money through app. We hope this article is useful for you.
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TNTP & Associates International Law Firm
Lawyer Nguyen Thanh Ha