Beware of the 0% interest consumer loan 'trap'
As the new year approaches, financial companies are promoting consumer credit with many attractive interest rates for individuals who need to borrow money for year-end shopping. However, if not careful, customers can easily fall into a trap.
Consumer lending boom at the end of the year
Sacombank is considered a bank that has implemented many consumer loan programs with 0% interest rate/year when cooperating with many different centers and products, from electronics to jewelry, beauty care, health care... Besides, some other banks also cooperate with real estate project investors to provide home loans with 0% interest rate/year in the first year such as HDBank.
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| Consumers need to consider carefully before deciding to take out a consumer loan. Photo: IT |
However, the subjects implementing the 0%/year interest rate loan programs the most in the final period of the year are financial companies. HD Saison Company applies the 0%/year interest rate installment loan program, loan term from 4 - 6 months for some smartphone products of Sony, Samsung, Oppo in December. Customers only have to pay 30 - 40% in advance for the loan and enjoy preferential interest rate of 0%/year.
Home Credit also cooperates with 5 major partners with nationwide distribution networks, namely Mobile World, Viettel, Vien Thong A, VinPro, FPT and 2 manufacturers to implement the 0% interest rate program with 2 phone product lines OPPO and Samsung. In addition, each month, Home Credit tries to offer at least 30 0% interest rate product packages applicable to product models.
These days, Ms. NTHang (Long Bien, Hanoi) often has to listen to calls inviting her to participate in credit loan packages from banks and financial companies. She said that what makes her most uncomfortable is that the staff calling do not have any information about the customers. When inviting and introducing their products, they constantly ask for personal information, making her feel like she is being interrogated.
Ms. Hang said: “A few times, I told them that I had no need, and then told them not to call me again. I even put their phone number on the block list. But then they contacted me with another phone number and continued to solicit and ask for my personal information.”
The nature is "exorbitant" interest
Ms. NThang said that 7 months ago, because she needed to buy a laptop but did not have enough money, she planned to buy it in installments. Searching for information on the website of HC electronics supermarket, she saw that there was a 0% installment program, only needing to pay 30% of the product value in advance to be able to buy the product, so she decided to buy it here. However, when talking with the staff of Home Credit company, she discovered that there was no 0% installment program as advertised.
Ms. Hang shared: “When doing the procedure, they asked for all kinds of information, from personal information, to home address, office, phone numbers of relatives, friends, colleagues. They even asked me to provide electricity and water bills and some other related personal documents. I had to wait for nearly 2 hours for the staff at the loan procedure counter to give me the financial loan contract drafted by their company. When I held the contract in my hand, I was surprised because the interest rate of the loan was 2.93%/month, there was no 0% installment program as advertised. With such an interest rate, after I finished paying off the debt, the difference that Home Credit received was 35.16% of the total value of the product, 5 times higher than the interest rate of the bank loan. In addition, for the next few days, they called my relatives and colleagues every day to ask for my personal information.”
To verify the information provided by Ms. Hang, the reporter contacted Home Credit's hotline to learn about the consumer loan program for Tet. A Home Credit employee named Ly invited the reporter to borrow cash, the amount of 13 million VND, for a term of 36 months. Mr. Ly advised: "Each month you have to pay the debt of 1,086,000 VND including principal, interest and loan insurance. If you pay on time, in full, and do not liquidate the contract early, you will get a 7-month promotion, which means you only have to pay for 29 months."
Experts warn that before intending to spend money on year-end shopping, consumers need to carefully determine whether they really need to buy and carefully research and calculate the difference between paying in one go and paying in installments. Only then can they make a purchase decision.
Experts warn that before intending to spend money on year-end shopping, consumers need to carefully determine whether they really need to buy and carefully research and calculate the difference between paying in one go and paying in installments. Only then can they make a purchase decision.
Even the employee named Ly enthusiastically advised the reporter that with this loan, the interest only has to be paid 543,000 VND, an average of more than 18,000 VND per day. Thus, it can be calculated that the interest that Home Credit collects from each customer participating in this consumer loan program is more than 18.4 million VND per person. The interest of 18,000 VND/day that Ly offered is even higher than the interest of many pawn shops.
Unlike Ms. Hang's case, Mr. NHLong (Hoan Kiem, Hanoi) said that, near the New Year 2016, he also got ripped off when he bought an iPad in installments at a phone and tablet dealer on Xa Dan Street (Dong Da, Hanoi).
“Because I don’t understand technology, I didn’t look at the prices elsewhere. And when I saw that the store had a 0% installment program, I decided to buy it. When I brought it home, a friend told me that I bought this iPad for 2 million VND higher than the market price,” said Mr. Long.
But what annoyed Mr. Long the most was that if he forgot to pay on time, the bank staff would constantly call him and his relatives to urge them to pay. They even put pressure on him by threatening to take the matter to court. Suddenly, he was in a difficult position.
Dr. Bui Kien Thanh - Economic Expert: State management agencies need to be responsible for managing consumer lending activities, not allowing financial companies to freely offer "sky-high" interest rates of up to 60%, even 70% because consumers themselves cannot clearly understand how financial companies and lending banks calculate interest rates. Many times, customers who go shopping fall into a passive position, they are easily persuaded by salespeople and financial company employees to borrow money and buy goods. Only when they hold the loan contract in their hands and calculate the amount of interest they have to pay do they fall back. There also needs to be clear regulations and rules for salespeople and financial company employees when they market installment loan packages to customers. This helps customers avoid being deceived.
Former Governor of the State Bank of Vietnam Cao Si Kiem: Consumer lending is a regular activity of financial institutions. This activity is both beneficial to banks and meets the consumption needs of society. In Vietnam, when the economy begins to grow, people's lives improve. Banks achieve good capital mobilization and good liquidity. At the same time, the competitiveness of domestic and international banks is also increasing, so consumer lending is one of the activities that banks must promote to expand their business capacity and build their brand. Consumer lending often has high interest rates, but comes with many risks. Experience from previous years shows that we must expand consumer lending activities, but also manage this activity very closely to minimize risks. For financial companies applying very high consumer loan interest rates, up to 60 - 70%. The Law on Credit Institutions and the Civil Law both have provisions allowing the liberalization of some operations such as consumer loans. In order to meet the immediate urgent lending needs, financial companies can apply higher lending interest rates to meet the needs of all people for consumer loans. The Civil Law also stipulates a control level for lending interest rates, if the lending interest rate is above that level, it can be usury. This is prohibited. Hoang Thang (recorded) |
According to Hoang Thang/Danviet
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