1) Read the loan agreement
- Under Thai law, a loan exceeding 2,000 baht must be recorded in writing and signed by the borrower in order for the loan agreement to be enforceable.
- A loan agreement only takes effect upon the borrower’s receipt of the money.
2) How to sign a loan agreement
- “Signing” in this context means putting a mark that represents you on the loan agreement. It can be your signature, your printed name, or your thumbprint and the signatures of two witnesses.
- In case the sum of money is revised after the signing of the loan agreement, you as the borrower need to sign on the loan agreement to acknowledge the change; the lender, for his part, needs to sign his acknowledgement on the loan repayment receipt.
3) Look at the loan repayment terms If you repay the loan in money, make sure you get one of the following proofs of repayment:
- A signed written receipt stating that the lender has received the repayment, or
- The lender’s copy of the loan agreement, signed by the lender to acknowledge receipt of repayment, or
- The borrower’s copy of the loan agreement, crossed out and signed by the lender. If you are repaying the loan in goods or other property, keep in mind that:
– When you offer goods or other property to the lender in lieu of loan repayment, you agree that you owe the lender the value of the offered goods or property. – When the lender accepts the goods or property you offer in lieu of loan
repayment, he agrees to be repaid at the market value of said goods or
property.
4) Look at the interest rate
- Interest compounding – the charging of interest on unpaid interest – is prohibited by law.
- Non-institutional lenders are not allowed to charge an interest rate exceeding 15 percent per year. .
- The lender is allowed to charge a compound interest if the borrower has been in arrears for interest payment for more than one year. However, the law requires that the borrower be notified in writing.
5) Look at the repayment term
- A fixed-term loan cannot be paid off early unless:
– The borrower is placed in absolute receivership under bankruptcy law
– The borrower fails to deliver collateral as agreed
– The borrower causes damage or depreciation to the collateral
– The lender makes no objections to the early repayment - If the loan term is not fixed, the loan can be called in on demand.
