Ministry of Industry and Trade warns of risks when borrowing consumer loans at high interest rates

The Competition Management Department, Ministry of Industry and Trade, said that borrowers charged interest rates of up to 60%/year will face many risks.

The Department of Competition and Consumer Protection (Ministry of Industry and Trade) has just issued a number of notes for consumers when signing consumer loan contracts. Recently, the Department has received many reports, denunciations and complaints from consumers related to the actions of consumer loan service providers.

Specifically, the consulting process shows signs of providing incomplete and inaccurate information, using many tricks to conceal information or providing false information about the content of the contract, including information about interest rates, loan terms, penalties, contract cancellation fees, etc.

No consumer information verification is performed, consumers only need to sign to get loan approval.

Do not provide contracts for consumers to study, creating a mentality for consumers to sign contracts without fully understanding the contents, and do not provide signed contracts for consumers to keep and track.

Debt collection and debt collection activities affect the reputation of consumers, their relatives and colleagues. According to the Competition Department, the above mentioned activities are affecting the property, honor, health and safety of consumers.

According to the Competition Authority, consumers do not have the financial capacity to repay the debt because the actual loan term is longer than the term the consumer was informed during the consultation process, resulting in the debt repayment amount increasing many times or because the actual interest rate is many times higher than the information the consumer was informed during the consultation process.

Some consumers reported to the Competition and Consumer Protection Department that borrowers were charged interest rates of 3-5%/month (36-60%/year). Previously, borrowers were advised by consultants that the interest rate was only 1-2%/month (about 12-24%/year).

There are even fines that consumers were not previously informed of, which create bad debt and affect consumers' credit ratings.

According to the Competition Management Department, users of consumer loan services should pay attention and consider carefully before signing a loan contract to purchase assets, goods, and services. Only sign after researching, understanding the contents and ensuring that the information is presented accurately.

Borrowers need to request contracts and transaction documents with full signatures and seals of the service provider to keep, compare and comply with the content of the contract.

When there is a dispute, in addition to reporting by phone to the service provider, consumers should combine sending emails or letters to ensure information is kept. Avoid the situation where financial service companies give the reason that they do not receive consumer complaints, so there is no basis for resolution.

According to Urban Economics