The question of what interest rate breaks the law has no single answer for every app loan: the answer depends on who the lender is, and on the borrower’s true total cost once every fee is added to the nominal rate.
Legal basis to know
For civil loans between individuals and non-credit-institution organizations, Article 468 of the Civil Code 2015 caps the agreed interest rate at 20% per year of the loan amount. Article 201 of the Penal Code defines the crime of usury in civil transactions where the rate reaches 100% per year or more with unlawful profit, with penalties scaling by the amount gained. Lending by licensed credit institutions follows the interest mechanism of the Law on Credit Institutions 32/2024/QH15 and State Bank rules, not the 20% cap of purely civil relations. When investigators assess a lending app, they look at the effective rate including all mandatory charges attached to the loan, not just the advertised interest figure.
How this applies in practice
The standard predatory app trick is keeping nominal interest low while stacking service fees, consulting fees and compulsory insurance onto the total cost, so the effective monthly rate already crosses the criminal threshold when annualized. Borrowers should understand that interest above the civil cap is not protected by law and that they may ask authorities to intervene when threatened during collection. For lawful lending platforms, disclosing the total annualized cost right on the borrowing screen is the best self-protection against being classed with loan sharks.
What to do now
- Borrowers should screenshot the entire loan offer, contract and repayment schedule before disbursement as evidence of the true total cost.
- Compute the effective rate by adding every mandatory fee to interest and annualizing it before deciding to borrow through any app.
- When threatened during collection, save messages, record calls and report to the local police instead of paying extra amounts demanded outside the contract.
Frequently Asked Questions
What interest rate on an app loan breaks the law?
In a civil loan, an agreed rate above 20% per year under Article 468 of the Civil Code 2015 exceeds the ceiling and the excess is not legally protected; if the rate reaches 100% per year or more with unlawful profit, the lender may be criminally prosecuted for usury under Article 201 of the Penal Code.
Do sky-high app fees count as usurious interest?
When assessing, authorities look at the loan’s true total cost including interest and all mandatory fees, so an app cannot evade usury liability by renaming interest as service fees, consulting fees or platform fees.
Who should terror-style collection by a lending app be reported to?
A borrower facing terror-style collection should report to the police at their place of residence with message, recording and phone number evidence; threatening, insulting or harassing collection conduct is prohibited and can draw administrative fines or criminal prosecution by severity, and the violating app can also be reported to market regulators and the State Bank.
This article has been quality-reviewed by the FLAW AI Legal Council