Warning about online lending with "exorbitant" interest rates
The Department of Competition and Consumer Protection (Ministry of Industry and Trade) has just warned about the extremely complicated online lending activities both domestically and internationally.
According to this agency, in the third quarter of 2018, the collapse of a series of online lending models, leading to other problems, seriously affected the lives and livelihoods of people in China.
In Vietnam, in addition to banks and financial companies, in recent years there has been the rapid and widespread emergence and development of online lending models, commonly known as: "Fast online loans"; "Unsecured loans", "Loans without meeting in person"... These models are often introduced as companies that provide support, advice and connection between borrowers and lenders (consulting companies).
Depending on the operating model, the lender can be specifically identified as a cooperative partner with the consulting company (for example, the model of ucash.vn; ATMonline.vn, avay.vn, clickvay.vn, doctordong.com; monily.vn, olava.vn, fastdong.com, dongshopsun.vn...) or not identified as the model of tima.vn; vaymuon.vn - known in the world as the peer to peer lending model.
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| Online lending activities are flourishing on the internet but are not strictly managed, leading to many consequences for borrowers. Illustration photo |
However, in reality, some online lenders are pawnshop owners connected with financial consulting businesses (Fintech) who continuously invite people to borrow money online.
Mr. Thy (Go Vap District, Ho Chi Minh City) said that every month he receives 2 messages inviting him to borrow 4 million VND from LGC Financial Consulting Company Limited (doctordong.com). The reason is that 2 months ago he borrowed 1.5 million VND online from doctordong.com, so the company has stored his information. Since then, doctordong.com has continued to market to promote and find more borrowers.
In this situation, the Competition and Consumer Protection Department advises consumers to be careful when providing information to register for loans. Specifically, because most transactions are conducted online, the scope of information collection and use by companies is very large, including some specific purposes, such as checking information about borrowers through social networks that borrowers register (facebook, zalo ...), or to contact to remind/collect debts when overdue debts arise (phone calls from relatives, colleagues ...).
On the other hand, lenders often have connections with gangsters and can hire them to come to the borrower's home to violently collect debt when the borrower has not paid or is unable to pay.
Therefore, according to the Competition and Consumer Protection Department, before borrowing money, borrowers need to find out who the lender is and what the disbursement procedures are. Especially when some financial consulting companies cooperate with pawnshops, borrowers must sign a pawnshop contract with the relevant unit to make the disbursement, the loan interest rate according to the agreement must not exceed 20%/year of the loan amount. But in reality, these companies will charge additional fees, such as consulting fees, loan management fees, etc., leading to interest rates and fees of up to 700%/year.
In addition, the Competition and Consumer Protection Department recommends that borrowers research and request lenders to provide documents confirming the disbursement cancellation period, regulations on costs and loan extension methods so that they can proactively and promptly handle the situation when needed; proactively search on the website or ask the consulting company to provide a sample contract and all accompanying transaction conditions for study before confirming the transaction...
After signing, consumers should ask the company to send a signed contract for storage and comparison, and use when disputes arise. In case the contract content is found to be inconsistent with the consulting or advertising content, consumers should use forms of reflection and complaint with a trace to the company, such as sending an email or sending by post with delivery confirmation.
Finally, the authorities also note that even when borrowing small amounts, consumers should have specific and certain calculations to ensure the ability to repay on time, avoiding the occurrence of high and unnecessary costs.
