In Japan, an individual may occasionally lend yen to someone close, but anyone lending repeatedly must register as a kashikin-gyōsha, a money lender, and the Interest Rate Restriction Act caps the rate at between 15 and 20% a year.
One-off loan or lending business: where Japanese law draws the line
The Money Lending Business Act (Kashikin-gyō-hō) covers anyone who lends with the intention of doing so repeatedly and continuously. The Financial Services Agency (FSA) points out that a private person falls under this regime as soon as they offer loans to strangers.
Caps under the Interest Rate Restriction Act (Risoku seigen-hō)
The contractual rate is limited to 20% a year below 100,000 yen, 18% between 100,000 and one million yen, and 15% above that. Any interest beyond these thresholds is void, even in a contract signed between two private individuals.
Registration with a regional finance bureau or a prefecture
A professional lender registers with the governor of their prefecture if all their offices are in one prefecture, otherwise with a regional finance bureau (zaimukyoku). Their number can be checked in the FSA's public database before any money changes hands.
The one-third income rule and consumer credit
Since the reform took full effect in 2010, total borrowing from registered lenders may not exceed one third of annual income, a rule known as sōryō kisei. Adverts promising to get around this ceiling almost always point to an illegal operator.
Japanese social lending: loans mostly for businesses
Japanese social lending usually works through an anonymous partnership contract (tokumei kumiai): investors fund an operator registered as a Type II financial instruments business, which lends to property or trading companies. A Japanese individual almost never borrows there for personal needs.
Known operators and past administrative sanctions
Services such as OwnersBook, LENDEX and Crowd Bank exist, but several platforms in the sector have received business improvement orders from the FSA in recent years. Before investing, read the register of financial firms and compare with our page on crowdfunding between individuals.
Family loans and gift tax (zōyozei)
A loan between parents and children without a contract or regular repayments may be reclassified as a gift by the tax office (zeimusho). The basic annual gift allowance is 1.1 million yen per recipient; above it, gift tax becomes payable.
Interest received: miscellaneous income and kakutei shinkoku
Interest from a private loan is in principle treated as miscellaneous income (zatsu shotoku), taxed on the progressive scale along with local residence tax. The lender declares it in the kakutei shinkoku, the annual return filed between mid-February and mid-March with the National Tax Agency.
Notarial deed with an enforcement clause at the kōshō yakuba
For large amounts, parties can have an official deed (kōsei shōsho) drawn up at a notary office. With a clause accepting compulsory enforcement, the lender can enforce without a lawsuit; our page on the notary's role in a private loan explains this logic.
Tanomoshi-kō, mujin and moai: traditional mutual aid
Japan has long-standing rotating savings circles: tanomoshi-kō, mujin in Yamanashi Prefecture and moai in Okinawa. These groups rest on trust between neighbours; they must never become a front for a collector who demands an initial payment from newcomers.
#個人間融資 adverts on social media
The FSA warns about loan offers posted on X or Instagram: they often hide yamikin, illegal loan sharks who demand unlawful rates, identity documents or even compromising photos. See our feature on loan scams on social media.
Reporting an illegal lender: #9110, 188 and the FSA
A victim can call the police consultation line #9110, the consumer hotline 188, the FSA's counselling office for financial service users or the centre run by the Japan Financial Services Association. Keep screenshots, transfer statements and account numbers.
How to set up a regulated private loan in Japan
- Set a rate below the Risoku seigen-hō cap that applies to the amount lent, or agree an interest-free loan between relatives.
- Draft a loan for consumption contract (kinsen shōhi taishaku keiyakusho) stating the amount, instalments, rate and late-payment penalties.
- Attach the revenue stamp (shūnyū inshi) matching the amount to the original copy of the contract.
- Pay the funds by bank transfer (furikomi) rather than in cash, so that a record exists.
- Have repayments made on a written schedule and keep every statement, especially for a family loan that could be treated as a gift.
- For a large sum, have a kōsei shōsho drawn up with a compulsory enforcement clause.
- Faced with an offer from a stranger, check their number in the FSA's register of registered money lenders.
Rates, taxes and fees on a private loan in yen
| Item | Order of magnitude (indicative) | Remark |
|---|---|---|
| Contractual interest | 20%, 18% or 15% a year at most, depending on the amount | Excess void under the Risoku seigen-hō |
| Revenue stamp on the contract | ¥200 to ¥2,000 up to ¥5 million | Exempt below ¥10,000 |
| Kōsei shōsho notarial deed | Regulated scale based on the amount | Ask at the kōshō yakuba |
| Tax on interest received | Progressive scale plus residence tax | Miscellaneous income to declare |
| Gift tax if reclassified | Above ¥1.1 million a year | A contract and repayments avoid this risk |
| Fees demanded by a fake lender | Variable, often a few tens of thousands of ¥ | Almost always lost for good |
Documents to gather before signing in Japan
- My Number card, or residence card (zairyū card) for a foreign national
- Seal registration certificate (inkan tōroku shōmeisho) if the jitsuin registered seal is used
- Written loan contract bearing the revenue stamp
- Statement for the receiving Japanese bank account
- Repayment schedule signed by both parties
- Proof of furikomi transfers
- Borrower's proof of income
Common traps and scam signals in Japan
- Paying guarantee fees (hoshōkin) before receiving the loan: a registered lender never asks for this kind of advance.
- Accepting a loan in the form of a purchase of future wages (kyūryō factoring), which the FSA treats as illegal lending.
- Sending codes for prepaid cards bought at a konbini to a so-called lender met online.
- Sending a photo of your My Number card to an anonymous account, which exposes you to identity theft.
- Lending to a relative without a contract or traceable transfer, then finding the tax office has reclassified it as a gift.
Your questions on peer-to-peer lending in Japan
Can an individual lend to a friend in Japan without registering?
Yes, for an occasional loan to someone they know. Registration becomes compulsory once there is an intention to repeat, for example by posting offers online. The rate remains capped by the Interest Rate Restriction Act, whatever the lender's status.
What is the maximum rate on a 500,000 yen loan?
For capital between 100,000 and one million yen, the civil cap is 18% a year. Any interest beyond that is void, and the borrower can challenge overpaid sums in court or with the help of a lawyer.
Can a foreign resident borrow through a Japanese platform?
Japanese social lending platforms mainly fund companies, not individuals. A foreign resident would rather turn to their bank or a registered lender, checking any conditions linked to the length of their residence permit.
Do I have to declare a family loan to the Japanese tax office?
There is no general form for declaring the loan itself. You must, however, be able to prove it is a genuine loan: a contract, a reasonable rate and regular repayments. Otherwise the tax office may apply gift tax. A zeirishi, a licensed tax accountant, can confirm your position.
Who should I contact after paying a fake lender?
Call the police quickly on #9110, or 110 in an emergency, alert your bank to try to freeze the receiving account, then contact the 188 hotline. Japan's law on relief for victims of fraudulent transfers sometimes allows a partial refund.