Financial firms promote installment loans

Financial companies are offering more installment loans to buy electronic products and motorbikes as the number of large personal loans for houses or cars has dropped in recent months.

Lenders are working with most electronic shops and motorbike showrooms in HCM City to offer installment loans with simple loan procedures. Different interest rates are offered for different groups of borrowers.

According to a loan consultant at Societe Generale Viet Finance Company, loans of up to 70 per cent of the product’s value are offered to customers for six to 24 months at an electronics shop on Tran Hung Dao Street in District 1.

Customers only need to submit a copy of their identification card, family record book and recent electricity or water bill.

The company applies an average interest rate of 2.58 per cent per month. However, customers who show work contracts and a recent salary report or bank statement that shows salary pay only 1.86 per cent per month.

Y Nhi, an office worker in District 1, said the interest rate of 1.86 per cent per month is acceptable compared to the current interest rate in the market.

Other financial companies, including Home Credit Viet Nam and ACS Trading Viet Nam Co Ltd, also offer various programmes to promote consumer loans.

Suong, a financial consultant for ACS Trading Viet Nam Co, Ltd for a Yamaha motorbike shop in District 1′s Ly Tu Trong Street, said her company can offer a loan of up to 80 per cent of a product’s value at 2.5 per cent interest per month.

Customers do not need to prove their income if the loan is under VND35 million (US$1,691), she said.

Home Credit Viet Nam applies 3.4 per cent and nearly 3 per cent per month on loans for electronic products and motorbikes, respectively.

Dinh The Hien, director of the Informatics and Applied Economics Research Institute, cautioned of the potential risks that financial companies may bear when they apply such simple loan procedures.

Financial companies should carefully check customers’ documents before offering loans, he said.

An officer at a financial company said that to avoid risk of offering large personal loans for houses or cars, his company focuses on offering loans to buy electronic products, mostly mobile phones and laptops.

Financial companies usually apply a higher interest rate on personal loans than that of commercial banks.

For instance, to buy an Exiter motorbike on an installment plan of 24 months, buyers pay in advance VND21 million, and pay VND2.333 million per month for the interest rate and principal.

Borrowers must carefully calculate the interest rate and read the terms and conditions of loan contracts to avoid future conflicts, Hien said. — VNS

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial