Private loans against Thai property: the 15% interest cap, written-evidence rule and default interest

What is the maximum interest a private (non-bank) lender can lawfully charge on a loan connected to Thai property? Under CCC Section 654, interest may not exceed 15% per year; if the contract fixes a higher rate, it is reduced to 15%. Banks and other financial institutions operate under separate legislation and can charge differently, so this cap matters mainly for private and seller-financed arrangements.

The three CCC rules that matter

• Section 653 — writing — a loan of money above THB 2,000 is not enforceable by court action unless there is written evidence of the loan signed by the borrower.
• Section 654 — the 15% cap — 'Interest shall not exceed 15% per year; when a higher rate of interest is fixed by the contract, it shall be reduced to 15% per year.'
• Section 655 — no interest on interest — interest does not bear interest, except that the parties may agree in writing that interest due for at least one year is added to the capital.

The criminal-law layer

Thailand's Act Prohibiting the Collection of Interest at an Excessive Rate B.E. 2560 (2017), in force from 16 January 2017, replaced the 1932 law. Per a Tilleke & Gibbins summary, it raised the maximum penalty to up to two years' imprisonment and/or a fine of up to THB 200,000, and it also targets attempts to conceal excessive interest, such as false statements about the loan amount or taking benefits other than interest. For a lender, structuring around the cap is therefore a real legal risk, not just a contract technicality.

Default interest when nothing is agreed

The 2021 emergency decree amending the CCC (effective 11 April 2021) set the Section 7 statutory rate at 3% per year, reviewable by the Ministry of Finance every three years, and reset the Section 224 default rate on money debts to the Section 7 rate plus 2 percentage points (5% at the time of enactment). Section 224/1 applies default interest to the unpaid instalment rather than the whole principal. These apply only where the contract does not set its own rate; because the Section 7 rate can be revised, confirm the current figure with a lawyer.

Where this bites in property deals

• Seller financing or a private bridging loan — keep the rate at or below 15%, put the loan in a signed writing, and avoid fees that look like disguised interest.
• A mortgage as security — a registered mortgage secures the debt but does not lift the interest cap; see mortgage default and foreclosure and mortgage priority ranking.
• Khai fak instead of a loan — some lenders use a sale with right of redemption to sidestep lending rules; see khai fak explained for why that is risky for the seller and regulated by a protective statute.
• Bank financing — foreigners' bank-loan options are covered in financing as a foreigner.

This is general information, not legal advice; have a Thai lawyer draft any private loan or seller-finance agreement.