Lunar New Year is a time when demand for shopping and entertainment increases, so the credit market will be more bustling.

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Understanding this psychology, commercial banks are rushing to provide financial loans in many forms, loosening procedures to meet the needs at the end of the year.

Stimulating consumption

A week ago, Ms. Phuong Lan (Bach Mai, Hanoi) decided to take out a loan to buy a Sony TV worth 25 million VND on Trang Thi Street. After researching and listening to advice from a financial company's staff, she was able to access a consumer loan. "My family wanted to buy a new TV but lacked the money. However, when I chose to pay in installments, the procedures were clear, approved quickly and simply right at the store" - Ms. Lan shared.

Currently, banks are vigorously implementing consumer loan and shopping loan packages with commitments to fast disbursement and attractive interest rates. A representative of the International Commercial Joint Stock Bank (VIB) said that on the occasion of the Lunar New Year 2016, from January 4 to February 29, VIB is implementing a preferential interest rate loan package for customers borrowing to buy real estate, build and repair houses, buy cars, and take out consumer loans. A representative of VIB shared: "The preferential interest rate is applied at 8.99%/year for the first 12 months or 7.99%/year for the first 6 months of the loan. The interest rate after the preferential period is very competitive, equal to VIB's 12-month VND savings interest rate plus a margin of 3.3%/year".

Or at TPBank, the interest rate for car purchases is only from 7.7% per year for 18 months. As for HSBC, this bank supports customers with home loans with interest rates from 6.49% per year. Similarly, VietinBank is also ready to give away home furniture or cars to customers who borrow to buy cars or houses near Tet. In addition, to increase outstanding consumer loans at the end of the year, many banks also aim to promote the development of credit cards. Most banks run preferential card opening programs, from free issuance to gifts (suitcases, household appliances), or declare refunds of up to one or two million VND when using the card.

Ms. Nguyen Thanh Huong - Sales Supervisor of the Northern Region, FE Credit Finance Company said: "Currently, the increasing demand for shopping has caused installment loan products to develop more and more, and installment programs are of more interest to people. The company has coordinated with many supermarkets to launch support programs, with just electricity and water bills and ID cards, customers can borrow at 0% interest for 12 months."
TPBank General Director Nguyen Hung also admitted: "Apart from Lunar New Year, businesses and people are reluctant to shop, so if we want to stimulate demand, this is the most appropriate period."

Contribute to eliminating black credit

The number of people in need of small loans in Vietnam is currently very large. At the recent 2015 banking industry review meeting in Hanoi, Deputy Governor of the State Bank of Vietnam Nguyen Dong Tien also recommended that banks must promote credit along with quality. To do so, in the coming time, banks should promote retail, strictly control credit to real estate and long-term loans to limit risks.

Consumer loans not only open up many business opportunities for banks and financial companies (CTTC), but this activity is also an effective financial solution to help improve the quality of life for people; stimulate consumption and contribute to eliminating "black credit". However, there is still a hesitant mentality of borrowers in the face of formal market procedures and interest rates, incentives are often short-term, after which banks apply floating interest rates. However, there are many solutions, customers should carefully study the terms of the contract to avoid future risks. Currently, when borrowing from CTTC, customers will be advised to buy loan insurance, although not mandatory, it plays a very important role. Usually, loan insurance accounts for 5 - 6% of the principal amount that customers register for unsecured loans at banks. For example, when a customer signs a loan contract of 20 million VND at CTTC to buy a product, the loan insurance is: 5.5% x 20,000,000 = 1,100,000 VND.

When customers buy insurance, in case of unforeseen risks occurring after taking out a consumer loan, the insurance company will pay the debt on behalf of the customer. And this is also an important criterion for financial companies to easily approve customers' loans quickly and conveniently.

According to Urban Economics