Loan & Credit Agreements in Türkiye for Foreign Borrowers and Lenders

If your company is borrowing from, or lending to, a party connected to Türkiye, the contract you sign sits inside a specific legal framework: the Banking Law and its regulator (the BDDK), the Turkish Code of Obligations for the contract and its guarantees, and the Enforcement and Bankruptcy Law if someone defaults. This guide explains, in plain terms, how loan and credit agreements work here, what security (teminat) you can take or be asked to give, how foreign-currency rules can affect the deal, and what actually happens when a borrower stops paying.

Which laws govern a loan or credit agreement in Türkiye

Three layers of law usually apply at the same time, and it helps to keep them separate in your mind.

• The Banking Law No. 5411 regulates who may operate as a bank or licensed lender in Türkiye and is supervised by the BDDK (Banking Regulation and Supervision Agency). It matters when one side is a Turkish bank or a regulated financial institution.
• The Turkish Code of Obligations No. 6098 (TBKTBKTurkish Code of Obligations No. 6098The statute behind almost every private agreement in Türkiye — contracts, liability for harm, lease, employment, agency and unjust enrichment.Glossary →) governs the contract itself — the loan (in Turkish, kredi sözleşmesi or tüketici/genel kredi), the parties' duties, interest, and the security documents such as a guarantee (kefalet).
• The Enforcement and Bankruptcy Law No. 2004 (İcra ve İflas Kanunu, "İİK") governs what happens on default — how a creditor collects, and how a mortgage or pledge is turned into cash.

For a cross-border deal you should also think about which country's law and which courts will govern the contract, because the parties can often agree on this — a point worth settling clearly before signing.

General credit vs. consumer credit: why the difference matters

Turkish law treats a loan to a business very differently from a loan to an individual consumer.

General (commercial) credit is the normal world for foreign investors: a company borrows for working capital, an acquisition, or a project. The parties have wide freedom to agree the terms, the interest, the fees, and the security. This is mostly a matter of the Code of Obligations and the contract you negotiate.

Consumer credit (tüketici kredisi) is loan finance taken by an individual for personal, non-commercial purposes — for example, a private person financing a home or a car. Here Turkish consumer-protection rules add mandatory protections: pre-contract information, a right to withdraw within a short statutory window, controls on fees, and limits on how guarantees against the consumer work. These rules cannot be contracted away to the consumer's disadvantage.

For most foreign-business clients the deal is commercial credit, but the line is not always obvious — a personal guarantee from a founder, for instance, can pull individual-protection questions into a corporate loan.

Security and collateral (teminat): the main tools

A lender will almost always want security — in Turkish, teminat — so that if the borrower fails, there is an asset or a person to recover from. The main forms are:

• Mortgage (ipotekİpotekMortgage over real estateA security right registered on a property so that a debt can be recovered from it if it is not paid.Glossary →) — a charge over real estate (land or buildings). It is created at the Land Registry and recorded against the title. If the debt is not paid, the property can be sold through enforcement and the lender paid from the proceeds.
• Pledge (rehin) — security over movable assets: shares, receivables, equipment, bank accounts, or a business as a going concern. A central movable-pledge register (the Pledged Movable Property Registry under the Law on Pledge over Movable Property in Commercial Transactions No. 6750, which replaced the older commercial-enterprise-pledge regime) lets a pledge often be taken without physically handing the asset over.
• Guarantee / suretyship (kefalet) — a third party promises to pay if the borrower does not. This is a personal commitment, not a charge over a specific asset.
• Independent guarantee (garanti) — a separate, abstract promise to pay on demand, common in trade and from banks.

Each tool behaves differently on default and carries different formality requirements, so the choice of security is a commercial and legal decision, not just paperwork.

Kefalet vs. garanti: a distinction that catches people out

Foreign lenders and borrowers often use "guarantee" loosely, but Turkish law draws a sharp line between two very different commitments.

Suretyship (kefalet) is accessory: the surety's liability depends on, and cannot exceed, the borrower's underlying debt. If the main debt is invalid or reduced, the surety's exposure follows it. To protect individuals, the Code of Obligations imposes strict formal conditions on a valid suretyship — typically the surety's maximum amount and the date must be in the surety's own handwriting, and a spouse's consent may be required. If these formalities are missing, the suretyship can be invalid.

Independent guarantee (garanti) is abstract: the guarantor promises to pay on the agreed terms regardless of disputes about the main contract. It is harder to escape and is the typical form of a bank's on-demand guarantee.

Foreign-currency loans: the restrictions concept

Türkiye has, for several years, restricted the use of foreign currency in certain domestic transactions, and lending is one of the sensitive areas. The policy aim is to limit currency risk inside the local economy.

At a concept level, you should be aware that:

• There are restrictions on Turkish residents borrowing in foreign currency domestically, with conditions and exemptions that often depend on whether the borrower has FX income or revenue, and on the size of the facility.
• Rules can also affect whether a contract price or loan can be denominated or indexed in foreign currency.
• These rules are set by decree and Ministry/Central Bank communiqués and are changed and fine-tuned relatively often.

This is the single area in loan documentation where foreign parties most often need bespoke, up-to-date advice rather than a template.

What happens on default: enforcement under the İİK

If a borrower stops paying, the creditor does not simply seize assets — collection runs through the enforcement system under the Enforcement and Bankruptcy Law (İİKİİKEnforcement and Bankruptcy Law No. 2004The Turkish statute governing how debts are collected by force — enforcement proceedings, attachment, sale and bankruptcy.Glossary →), supervised by the enforcement offices and courts.

In broad terms, the route depends on what security exists:

• Unsecured debt: the creditor starts enforcement proceedings (an icra takibiİcra takibiEnforcement proceedingA state-run collection proceeding opened through an Enforcement Office (İcra Dairesi) to recover a debt — in many cases without first winning a lawsuit.Glossary →); the debtor can object within a short statutory period, which may push the matter into court before collection continues.
• Mortgage (ipotek): the creditor uses the specific route of realising the mortgage — in Turkish, ipoteğin paraya çevrilmesi yolu ile takip — leading to a court-supervised sale of the property, with the lender paid from the proceeds in its rank.
• Pledge (rehin): a comparable enforcement route applies to pledged movables.
• Guarantee/suretyship: the creditor pursues the guarantor or surety, subject to the limits of the particular instrument.

Turkish enforcement is procedural and deadline-driven. Missing an objection window, or starting the wrong type of proceeding for the security you hold, can cost a creditor months — so the enforcement strategy should be planned when the loan is documented, not after the default.

Under the Court of Cassation's settled case-law, courts scrutinise both the validity of the underlying security and whether the correct enforcement route was used, so the paperwork done at signing is what protects you years later.

Cross-border points for foreign borrowers and lenders

When one party sits outside Türkiye, a few extra questions deserve attention early:

• Governing law and jurisdiction. Commercial parties can often choose a foreign governing law and forum, but security over Turkish real estate or registered assets is still enforced under Turkish procedure, regardless of the contract's chosen law.
• Enforcing a foreign judgment or arbitral award. A win abroad usually still has to be recognised and enforced in Türkiye to reach assets here, which is a separate court step with its own conditions.
• Notarisation, translation and apostilleApostilApostilleA certificate added to a public document in its own country so that it is accepted as genuine in Türkiye, without consular legalisation.Glossary →. Documents signed abroad, and powers of attorney, frequently need certified Turkish translations and an apostille to be usable before Turkish registries and courts.
• Withholding and stamp considerations. Cross-border interest payments and certain documents can carry Turkish tax or stamp-duty consequences — these should be checked with a tax adviser before pricing the deal.

How a lawyer helps before you sign

Most problems in loan and credit deals are designed in at the drafting stage, then surface years later on default. A Turkish lawyer working with foreign borrowers and lenders typically helps you:

• confirm whether the deal is commercial or consumer credit, and which mandatory rules bite;
• choose and correctly create the right security — mortgage, pledge, suretyship or independent guarantee — with the formalities that make it enforceable;
• check the foreign-currency position for your specific facility against the current rules;
• structure governing law, jurisdiction and enforceability so a remedy is realistically available in Türkiye; and
• map the default and enforcement route before money moves, so you are not improvising in a crisis.

Every figure, threshold and deadline in this area moves over time, so treat this guide as an orientation, not a substitute for advice on your own transaction. If you would like a document reviewed or a structure sanity-checked, our team is glad to help.

Frequently asked questions