Overview of Unsecured Loans
What is an Unsecured Loan? An unsecured loan is a form of lending that does not require collateral. The lending organization approves the loan based entirely on the individual’s creditworthiness and repayment ability. Customers typically take out unsecured loans for personal purposes, such as wedding expenses, travel, or consumer purchases.
Lending organizations can grant loan limits ranging from a few million to hundreds of millions of VND if the applicant meets the required lending conditions. The loan term is flexible, up to 60 months.
Currently, the two main financial entities providing strong unsecured loans are banks and financial companies, each with distinct characteristics. Banks typically lend to customers who can prove financial credibility, such as salaried employees, resulting in higher loan amounts and lower interest rates. Financial companies usually cater to freelancers or individuals with low financial standing, such as workers, offering smaller loan amounts with higher interest rates but faster disbursement.
Additionally, there are quick unsecured loan options available in the market, such as online loans via apps or websites. These entities operate on peer-to-peer (P2P) lending models or crowd-funding from individual investors to those needing money. These loans require only an ID card for quick disbursement of amounts from 500,000 to a few million VND but often come with exorbitant interest rates and additional fees.
Characteristics of Unsecured Loans Unsecured loan products have the following prominent features:
- No collateral required; approval is based on personal credibility and the company where the customer works.
- No need to prove the purpose of the loan.
- Quick disbursement, possibly on the same day or within 2-3 days after applying.
- Short loan terms, usually under one year; some packages offer terms of 24, 36, or up to 60 months for bank loans.
- Small loan amounts: from a few million to 50-70 million VND at financial companies, up to 500 million VND at banks.
- No collateral means no risk of losing assets if unable to repay on time.
- Customers can flexibly choose from cash consumer loans, installment loans, or overdrafts to meet personal financial needs.
Benefits of Unsecured Loans When taking out an unsecured loan, customers enjoy the following benefits:
- No need for collateral, so no risk of asset seizure.
- Quick access to funds to meet urgent needs, typically within 1-2 days or even the same day.
- Simple loan application process, requiring only personal and income verification documents.
- Easy access to loans with many banks and financial companies offering online unsecured loans.
- No additional costs, except minor fees like photocopying documents or postal fees (if applicable).
Types and Differentiation of Unsecured Loan Products Currently, in the financial market, unsecured loans are divided into three main types: cash consumer loans, installment loans, and overdrafts. Each type has distinct features, as detailed in the following table:
Factor | Cash Consumer Loans | Installment Loans | Overdrafts |
---|---|---|---|
Lending Institution | Banks and financial companies | Only certain financial companies like HD Saison, Home Credit | Only available at banks |
Loan Form | – Banks: Based on cash salary or salary transfer | Installment purchases at financial company partners | Overdraft via a bank account |
– Financial companies: Diverse (cash salary/transfer, insurance contracts, vehicle registration, utility bills, credit card, previous unsecured loan contracts, etc.) |
Besides banks and financial companies, there are other financial models like P2P lending for quick unsecured loans through websites/apps. These are promoted with attractive offers from unofficial organizations. However, caution is advised due to the high-interest rates and lack of credibility. Before borrowing online, thoroughly research the lending organization and understand the interest rates to avoid falling into predatory lending traps.
Conditions and Procedures To easily access unsecured loans, you need to meet the following conditions and procedures:
Conditions:
- Be a Vietnamese citizen with complete and clear legal documentation.
- Most banks require the borrower to be a Vietnamese citizen aged 20-60 years, as the loan is based on the customer’s credibility and repayment ability.
- The borrower must have a clear household registration or temporary residence to verify personal information.
- Stable income is essential for proving the ability to repay the loan. This can be shown through salary slips, labor contracts, etc. Some financial companies do not require salary proof but need proof of financial ability through life insurance contracts, utility bills, credit cards, etc.
- Good credit history is crucial. If classified as a bad debt from group 2 onwards, you cannot borrow from banks. Ensure to repay on time to maintain a good credit record.
Procedures: A simple unsecured loan application includes the following documents:
- Loan application form (provided by the bank or financial company)
- Personal identification documents:
- ID card/passport/citizen ID card
- Household registration book or temporary residence registration
- Income verification documents: salary slips/bank statements for the last 3 months, a labor contract of at least one year, or other documents proving the job position.
- For other loan forms, use life insurance contracts, utility bills, vehicle registration, main SIM card, business registration certificate, or unsecured loan contracts from other financial institutions.

Interest Rates and Calculation of Unsecured Loans Unsecured loans have higher interest rates than secured loans as they are based on the customer’s credibility and repayment ability. Bank rates are lower than those at financial companies:
- Bank rates: typically between 8-15% per annum, depending on the loan form.
- Financial company rates: between 20-40% per annum, with some companies charging up to 60-70% per annum.
Interest Rate Calculation: Monthly interest rate = Annual interest rate / 12 months Most lenders calculate monthly interest using one of the following methods:
Reducing Balance Method: Interest is calculated on the outstanding balance. The monthly interest payment decreases as the principal is gradually repaid.
Fixed Principal Method: Interest is calculated on the initial principal, and the borrower pays a fixed monthly interest amount until the loan term ends.
To easily calculate the monthly interest payment, you can use online tools that help plan your repayments accurately.
Where to Borrow Unsecured Loans? Customers can easily access unsecured loan packages as banks and financial companies offer diverse products to meet personal needs. However, choosing the right lender can be challenging. Most borrowers aim for the lowest interest rates, so consider your financial proof when selecting a loan package:
Based on income proof:
- If you have a stable, fairly high salary from 6-7 million VND onwards or receive cash salary from large enterprises, choose bank loans for the best interest rates around 11-15% per annum. Particularly, if you borrow from the bank where you receive your monthly salary via ATM card, you may get preferential rates.
- If your salary is low or you work freelance, it’s difficult to borrow from banks; in such cases, opt for financial companies with higher interest rates, 2-3 times higher than bank rates.
- If you urgently need funds within a day or two, financial companies are a good option due to faster approval and disbursement compared to banks.
Important Considerations Before Taking an Unsecured Loan Before taking out an unsecured loan, note the following:
- Only borrow if you truly need funds for urgent needs. Plan a reasonable repayment schedule to avoid the monthly interest becoming a financial burden.
- Thoroughly understand the lender’s interest rates and reconsider if they are unsuitable. Easier loan procedures often mean higher interest rates and risks.
- Choose a reasonable loan term to match your repayment ability; not too long to avoid high interest and not too short to ensure timely repayment.
- Borrow only the necessary amount suitable to your financial condition. This helps manage repayment without stress. Plan your expenses to pay interest timely and avoid bad debt.
- Choose reputable and official lenders to ensure long-term benefits and avoid risks. Pay attention to loan contract terms and penalties, including:
- Early repayment fee: a fee for early loan settlement, typically 2-6% of the remaining principal.
- Late payment fee: avoid late payments to prevent penalties and bad debt.
- Prepare all required documents to expedite the approval process.
Frequently Asked Questions About Unsecured Loans
How much can I borrow? Depending on the loan form, the maximum loan amount varies. For salary-based loans, the limit is up to 10 times the income. Priority customers can borrow up to 500 million VND.
What documents are required?
- Personal identification documents: ID/passport/citizen ID card, household registration or temporary residence registration.
- Income verification: labor contract, salary slips/bank statements for the last 3-6 months, or proof of financial capability through life insurance contracts, utility bills, etc.
- Business owners need additional business registration or tax reports.
What is loan insurance? Loan insurance protects your loan at the lending institution. You purchase this insurance to cover the risk of loan default in case of unforeseen circumstances.
What should I consider when taking out an unsecured loan? Choose a reputable lender, an appropriate loan term and amount, and understand the interest rates and contract terms. Plan timely repayments to avoid bad debt.
Can freelancers without fixed income borrow? Yes, freelancers can borrow from financial companies with alternative proofs like vehicle registration or utility bills. However, carefully balance the repayment ability and borrow only small amounts to avoid bad debt.
Can I borrow from two banks simultaneously? There is no specific limit on the number of banks you can borrow from. However, lenders assess your repayment ability, so borrowing from a second bank might be difficult if your financial capacity is already stretched.
Can I take a second loan? A second loan depends on your repayment ability and credit history. Reputable financial companies and banks allow multiple loans if you maintain good repayment behavior.
Can I take an unsecured loan while having a mortgage? Yes, but the unsecured loan approval depends on your current financial capacity and good repayment history. Ensure your income can cover both loans to avoid financial stress.