Interest on late payments and private loans in Thailand: the 3% / 5% statutory rates and the 15% cap

What interest applies if a buyer pays late, or if you lend money to a Thai buyer or builder? Since 11 April 2021 the statutory rate is 3% a year (CCC Section 7) and the statutory default interest on a money debt is that rate plus 2%, i.e. 5% a year (Section 224). Parties may agree a different rate in the contract, but loan interest above 15% a year is generally capped under Section 654.

The rules

• Section 7 — statutory rate. Cut from 7.5% to 3% a year by an Emergency Decree published on 10 April 2021 and effective 11 April 2021. The Ministry of Finance reviews the rate every three years and it can be changed by royal decree.
• Section 224 — default interest. The Section 7 rate plus 2%, currently 5% a year. It moves automatically if the Section 7 rate changes.
• Section 224/1 — instalments. Default interest runs only on the instalment that is overdue, not on the whole unpaid principal; a contract clause applying the default rate to non-defaulted principal is void.
• Agreed rates prevail. The statutory rates fill the gap; a contract can set its own late-payment rate within the limits of the law.
• Section 654 — loan ceiling. Interest on a loan may not exceed 15% a year; a higher contractual rate is reduced to 15%. Chambers notes banks can announce their own maximum rates for commercial baht loans above that cap, and that charging above the applicable ceiling can render the interest void.

Where this matters for a Phangan buyer

• Instalment payments to a developer or seller — the contract should state the late rate; if it does not, 5% applies from default. See the off-plan guide.
• Private or vendor financing — a seller-financed or friend-of-a-friend loan above 15% a year is exposed to being cut back. For bank routes see financing as a foreigner and mortgage default and foreclosure.
• Flat fees dressed as interest — a penalty is a separate mechanism; see penalty clauses under CCC 379-385.
• Court claims — when a buyer sues for non-transfer, interest on money owed is part of the claim; see buyer remedies.

Takeaway: always write the late-payment rate into the contract. Do not rely on the old 7.5% figure still quoted online, and do not assume a high private-loan rate is enforceable. Car and motorcycle hire-purchase has its own separate caps and is not a change to Section 224. Rates can be revised by royal decree, so confirm the current figure with a Thai lawyer.