Banks tighten car loans, customers reluctantly give up deposits

Many people who buy cars through bank loans are facing difficulties due to high interest rates. Many people have had to cancel their car purchase plans because they are afraid of not being able to repay the loan.

According to the reporter's records at some car dealerships in Hanoi, for more than a month now, banks have begun to tighten consumer loans because the credit limit (credit room) from now until the end of the year is not much left. Interest rates for car loans have exceeded 10%/year at some banks.

Talking to reporters, Mr. Huu Linh, a sales staff at a Ford car dealership in Hanoi, said that normally, out of 10 people who buy cars, only 2/3 of them can pay in full. The rest need capital support from the bank. But now, interest rates are too high and disbursement is difficult, so the number of people buying cars at the dealership has decreased by 25-30% compared to previous years.

Mr. Linh said: “A customer of mine has deposited 20 million to buy a Ford Territory Titanium X, expected to receive the car at the end of November. The bank agreed to lend him an installment loan with an interest rate of more than 13%/year within 5 years or 9.5-10%/year in the first year, the interest rate will be adjusted according to the market in the following years. This rate increased by 1-2% compared to before. Because of the high interest rate, that customer finally decided not to borrow to buy the car anymore, accepted to give up halfway, and lost the deposit."

"There are customers who like the car, have chosen the color and version, and plan to borrow from the bank, but then they do not qualify for the loan, and are afraid of high interest rates, so they have to regretfully postpone the plan to buy a car for their family at the end of the year," Mr. Linh added.

Banks tighten disbursement and increase loan interest rates, affecting the auto market. Illustrative photo.

Having saved more than 300 million VND, Mr. Thanh Cong (Dong Anh, Hanoi) plans to borrow another 300-400 million VND to buy a Kia Sonet but is also having difficulty in the loan application process.

He shared: “It is true that these are difficult times, not all banks are comfortable disbursing loans. When I was consulted about the loan, I was surprised when an employee asked me to pay an additional fee, which is to buy loan insurance and life insurance to get the loan disbursed. The employee even suggested that if I did not want to buy insurance, I should pay an additional fee to get the loan disbursed."

"I flatly refused, and decided to discuss with my wife about buying another cheaper car so that I wouldn't have to borrow from the bank at this time."

According to Mr. Bui Duong - Head of Sales Department of a car dealership in Hanoi, the demand for cars in the market is at a high level but may still be affected to some extent by car loan interest rates. Companies and dealers will have to increase incentive programs and attractive discounts to stimulate consumption and maintain growth momentum. They may even have to sacrifice a part of their profits to rush to meet year-end sales.

Assessing the year-end auto market, Mr. Duong said that in the last two months of 2022, purchasing power will fluctuate unpredictably and may not increase sharply according to the Lunar New Year season as every year. "The shortage of gasoline, banks tightening loans, high car prices... all directly affect the auto market. On the dealer side, they have difficulty accessing loans to import cars. Customers are the same, they will consider more about the benefits of buying a car in the current context," Mr. Duong said.

According to a recently released report by VAMA (Vietnam Automobile Manufacturers Association), car consumption continued to grow strongly in October with a total of 36,560 vehicles sold, up 9.3% compared to September 2022 and up 22.7% compared to the same period in 2021. In the first 10 months of the year, the entire car market sold a total of 296,574 vehicles, up 52% ​​over the same period in 2021.