Concealed Interest in Personal Loan Contract of Financial Institution

Abstract

A personal loan contract of a financial institution is a loan contract widely used by service users because it is conveniently accessible and a guarantor is not required. However, when this type of loan contract defaults a many lawsuits are filed before the court. Therefore, this research studied the issue of interest and other additional types of money besides the interest in personal loan agreements of financial institutions, and studied related to the laws, including the Civil and Commercial Code, Excessive Interest Rate Prohibition Act, B.E. 2560 (2017), Interest rate of Financial Institution Act B.E. 2523 (1980) and Financial Institutions Business Act B.E. 2551 (2008).

As a result, according to personal loan contracts of financial institutions, there is the law called the Interest on Loan Interest act of financial institutions B.E. 2523 (1980) which authorizes the financial institutions, that the lenders are entitled to charge the interest on loans at rates above 15 percent per annum. Other types of charges are also available using different names, such as fees which are calculated in the combination with the interest, causing high debt burdens to the borrowers. The opportunity to the loan repayments are difficult. Thus the laws should be amended to solve the problem of double billing by using other name of the law, and the agency should be established to monitor the contracting of the personal loans of financial institutions.