Be careful when borrowing for consumption at the end of the year

According to data released by the State Bank of Vietnam (SBV) last weekend, credit growth as of September 20 only reached 10.46% compared to the end of 2015. Since there are only 3 months left until the end of the year, many banks have accelerated to achieve the credit growth target of 18-20%. In particular, boosting credit growth in the form of consumer loans and credit cards is being targeted by many banks.

Banks step up credit offers

Recently, Mr. Hong Vinh, living in District 1, Ho Chi Minh City, has been constantly receiving calls from banks inviting him to make cards and consumer loans. “Sometimes in one day, I receive 4-5 calls from banks inviting me to make cards. Many calls come during busy times at work, which makes me very annoyed,” Mr. Vinh lamented.

Similarly, Ms. Thu Ha, in Binh Thanh District (Ho Chi Minh City) is also helpless because she continuously receives calls from banks. Almost every day, she receives calls inviting her to make cards from domestic and international banks. Even in one morning, there are up to 3 calls from a bank, only 15-30 minutes apart.

Regarding a bank that repeatedly called customers in one day to bother them, the callers said: “The manager assigned the customer phone list to many employees, so it was easy for duplicate numbers to occur.” What was annoying was that the callers only knew the customer’s name but did not know what the customer did, where he lived, or what his salary was, so when offering to make a card, they continuously asked for personal information, making those who did not need to make a card feel like they were being interrogated.

Not only banks, but also credit institutions are constantly inviting customers to borrow capital. According to financial experts, because lending via credit cards and consumer loans always has higher interest rates than lending to businesses, about 20%/year, banks and credit institutions are very enthusiastic about lending in this form. In particular, the implementation is stronger towards the end of the year because this is the time when consumers need a lot of money to spend on shopping and home repairs.

Be careful of "falling into traps" when borrowing capital

According to Mr. Phan The Thang, Deputy Head of the Department of Consumer Rights Protection (NTD), Competition Management Department (under the Ministry of Industry and Trade), although consumer credit is only a short-term loan and consumers do not have to mortgage assets, only prove income to be able to borrow, but this can also easily cause risks for borrowers if consumers do not clearly understand the provisions in the contract. Specifically, most people who apply for credit cards or consumer loans do not clearly understand the information even after signing, such as: interest rates, conditions for early contract liquidation, penalty fees, repayment period. Even the way banks or credit institutions provide contracts does not create conditions for consumers to study the terms, most of them let customers sign fake contracts or do not provide contracts immediately (usually sent by post after signing).

Ms. Thu Ha admitted that after signing a consumer loan with a bank for 60 million VND with a term of 3 years, the average interest rate is 8 million VND/year, the interest after 3 years is 24 million VND. The form of paying the loan by equalizing each month is more than 2.3 million VND, according to the bank's calculation sent via email, the interest rate decreases gradually plus the principal increases gradually each month. For example, the first month's interest will be 2,150,000 + principal 150,000 = 2,300,000 VND/month, the next month's interest will be 2,100,000 + principal 200,000 VND.

Because she was not advised on this calculation method, she only had about 1 year left to pay off her debt, so Thu Ha planned to pay off the bank to reduce the interest by a few million VND. But according to the bank's announcement, if she paid off the entire amount, she would still owe about 22 million VND, and after paying the penalty fee, it would be nearly 23 million VND. Of which, the entire amount was the principal, and the interest had been almost paid off 2 years ago. "I was really upset because it felt like I was being cheated. If the bank had given me detailed advice on paying interest, I would have reconsidered whether to borrow or not," Thu Ha shared.

Mr. Phan The Thang said that before taking out a consumer loan, consumers should carefully study the interest rates and the interest calculation methods of banks and credit institutions to avoid unnecessary risks, and should also have a specific spending plan to be proactive in their finances. For lenders, the law also requires lenders to fully and clearly disclose relevant information before, during and after conducting consumer credit transactions, including repayment methods, interest rates, late payment penalties, default terms, etc. to consumers.

According to baotintuc