Loan Agreement in Thailand: Over ฿2,000 Needs Written Evidence, Interest Capped at 15%/Year

Lend more than ฿2,000 without written evidence signed by the borrower, and you lose the right to enforce the loan in court. The debt does not legally disappear, but you have no legal tool to recover the money if the borrower simply refuses to pay. And when you lend as a private individual, the interest you can charge has a hard ceiling too.

The most common scenario is lending money to a relative or friend "on trust," with no paperwork at all, or nothing more than a short chat exchange. This article covers the ฿2,000 threshold under Thai law, the lawful interest rate, the clauses every loan agreement (สัญญากู้ยืมเงิน) needs, stamp duty, and how to get the borrower to sign before you actually transfer the money.

TL;DR: Lending more than ฿2,000 without written evidence signed by the borrower means the loan is unenforceable in court (Section 653 of the Thai Civil and Commercial Code). The debt does not legally vanish, but you lose the right to use the courts to recover it. Between private individuals, interest is capped at 15% per year (Section 654); write a higher rate and the law automatically reduces it to 15%. Charging excessive interest also carries criminal penalties under the Prohibition of Charging Interest at Excessive Rates Act B.E. 2560 (2017). A loan agreement can be signed electronically under the Electronic Transactions Act B.E. 2544 (2001). (General information, not legal advice.)

Key Takeaways

• Over ฿2,000 requires written evidence signed by the borrower; without it, the loan cannot be enforced in court (Section 653)
• Interest between private individuals cannot exceed 15% per year; anything higher is automatically reduced to 15% (Section 654)
• Charging excessive interest also risks criminal penalties under the 2017 Act, separate from the civil consequences
• LINE chats discussing the loan may serve as supporting evidence, but "may not be clear enough" compared with a signed agreement
• A loan agreement can legally be signed electronically
• This article is general information, not legal advice for any specific case

Over ฿2,000 Must Be in Writing, or You Cannot Sue

The law requires that a loan of more than ฿2,000 be supported by written evidence signed by the borrower before it can be enforced in court (Section 653 of the Civil and Commercial Code). Without it, the loan is not void, but the lender has no way to use the courts to recover the money.

"Written evidence" here does not always mean a formal contract. Any document that proves a loan exists and carries the borrower's signature can qualify. A bare payment receipt that never mentions a loan, however, is usually not enough.

A point that confuses many people: a LINE chat in which the borrower admits to the loan may be usable as supporting evidence, but it "may not be clear enough" compared with a clearly signed agreement, because proving who typed the messages and whether the thread is complete is much harder.

Interest Is Capped at 15% Per Year — and What Happens If You Write More

Between private individuals, loan interest cannot exceed 15% per year (1.25% per month) under Section 654. If the contract states a higher rate, the law automatically reduces it to 15% per year; the rest of the agreement remains binding.

The statute is explicit that interest above the legal rate cannot be charged. Where a higher rate has been agreed, the excess portion is unenforceable, but the principal and interest within the legal rate can still be collected as normal.

Why Banks and Finance Companies Can Charge More Than 15%

The 15% annual cap applies to lending between private individuals who are not financial institutions. Banks, credit companies, and licensed micro-lenders operate under their own specific legislation, which sets separate interest ceilings.

This is where many people get confused: they assume the credit card or consumer loan rates they see advertised are the same standard that applies when lending to a relative. They are not. Licensed financial institutions are governed by specific laws entirely separate from Section 654.

Criminal Penalties for Charging Excessive Interest

On top of the civil consequence of interest being reduced to 15% per year, charging excessive interest is also a criminal offence under the Prohibition of Charging Interest at Excessive Rates Act B.E. 2560 (2017), which carries imprisonment and fines.

The Act covers both formal lending and informal, off-the-books lending, with an exception for financial institutions supervised under their own specific legislation.

The Clauses Every Loan Agreement Needs

A safe loan agreement needs at least 8 elements: full identification of both parties, the loan amount in both numbers and words, an interest rate no higher than 15% per year, the date the money is actually received, the repayment schedule, a guarantor (if any), late-payment penalties, and a repayment method that leaves a verifiable trail.

1. Party identification — full names, ID card numbers, and addresses of both lender and borrower
2. Loan amount — stated in both numbers and words to prevent later alteration
3. Interest rate — no more than 15% per year, with a clear calculation method
4. Date the money is received — the starting point of the obligation
5. Repayment schedule — lump sum or instalments, with due dates
6. Guarantor — if required, the guarantor must also sign the document
7. Late-payment penalty — set at a reasonable rate
8. Repayment method — bank transfer is recommended so there is proof of payment; cash without a receipt is not

Does a Loan Agreement Need Stamp Duty?

Loan agreements appear in the stamp duty schedule of the Thai Revenue Code and should carry stamp duty at the rate the law prescribes. The exact rate and cap should be checked with a tax advisor or the Revenue Department before relying on them, since the precise figures can change and should be confirmed from official sources.

Already Lent the Money With No Contract?

If you have already transferred the money without a contract, it is not too late. Having the borrower sign a debt acknowledgment letter is a way to create written evidence after the fact, and it may restart the limitation period. Read the full guide on how a debt acknowledgment differs from a loan agreement and what it must contain.

Can a Loan Agreement Be Signed Online?

Yes. Under the general principles of contract law, a loan agreement can be signed with an electronic signature under the Electronic Transactions Act B.E. 2544 (2001), which recognizes electronic documents and signatures as equivalent to paper — provided the method used is reliable and can be verified after the fact.

The most important point in practice is to have the borrower sign before you transfer the money, not after. The moment just before the money leaves your account is when both parties are most clearly in agreement. Sending a signing link with OTP identity verification and a recorded audit trail strengthens the evidentiary weight of the document — it is not an absolute, 100% legal guarantee.

Read the full guide to the legal validity of electronic signatures in Thailand

Frequently Asked Questions

The loan is exactly ฿2,000 — do I need a contract?

The legal threshold is "more than" ฿2,000. A loan of exactly ฿2,000 does not fall under the Section 653 requirement, but having written evidence is always good practice anyway.

The contract doesn't mention interest — can I still charge it?

This turns on the statutory interest rate that applies when no rate was agreed in advance, which is something to review with a legal advisor case by case.

Can a LINE chat where the borrower admits the loan be used as evidence?

It may serve as supporting evidence, but it "may not be clear enough" compared with a clearly signed agreement, because identity and message completeness are harder to prove.

Does the guarantor need to sign too?

Yes. If you want a guarantor on the loan, the guarantor must personally sign the document for the guarantee to be binding.

The contract says 3% per month — what happens?

3% per month equals 36% per year, which exceeds the 15% annual cap under Section 654. The law automatically reduces the rate to 15% per year, and collecting the excess also carries criminal risk under the 2017 Act.

Is an online-signed loan agreement legally valid?

Yes, under the Electronic Transactions Act B.E. 2544 (2001), provided the signing method is reliable and verifiable after the fact.

Summary

A safe loan agreement starts with knowing the ฿2,000 threshold, the 15% annual interest cap, and the complete set of clauses. Most important of all: have the borrower sign before you transfer the money, not after.

Try it free — create a loan agreement and send it for signature before you transfer

If the money has already been transferred without a contract, read how to prepare a debt acknowledgment letter to create evidence after the fact.

This content is general information, not legal advice for any specific case. Consult a legal advisor before using any contract.