How must a borrower pay loan interest when the payment becomes due but the borrower fails to pay or only partially pays the principal and/or interest as agreed?
When the payment becomes due but the borrower fails to pay or only partially pays the loan principal and/or interest as agreed, the borrower must pay interest as follows:
a) Interest on the outstanding principal at the agreed lending interest rate corresponding to the loan term that has become due but remains unpaid;
b) If the borrower fails to pay the interest on time as prescribed in Point a of this Clause, the borrower must pay late payment interest at a rate agreed between the credit institution and the borrower, provided that such rate does not exceed 10% per year, calculated on the overdue interest amount corresponding to the period of late payment;
c) If the loan becomes overdue, the borrower must pay interest on the overdue principal for the period of late payment at an interest rate not exceeding 150% of the in-term lending interest rate at the time the loan is classified as overdue.
(Legal basis: Clause 4, Article 13 on Lending Interest Rates under Circular No. 39/2016/TT-NHNN regulating lending activities of credit institutions and foreign bank branches to customers)
Additionally, Point b, Clause 2, Article 8 of Resolution No. 01/2019/NQ-HĐTP provides:
If the borrower fails to pay interest on the principal on time as agreed in the credit contract, the borrower must pay late payment interest at a rate agreed between the credit institution and the borrower, but not exceeding the statutory interest rate cap applicable to the period of late payment on the in-term principal interest.
