Personal consumer lending is a financial solution where individuals use leverage from banks to obtain funds through unsecured or secured loans for personal and family consumption.
Table of Contents
- What is Consumer Lending? Characteristics of Consumer Lending
- Purposes of Consumer Lending
- Consumer Lending Process
- Types of Consumer Lending
- Reputable Consumer Lending Institutions
- Consumer Lending at Banks
- Consumer Lending at Financial Companies
What is Consumer Lending?
Consumer lending is a type of loan designed to support financial needs for shopping, household items, purchasing vehicles, studying abroad, organizing weddings, traveling, buying furniture, home renovations, and other daily life needs.
The most common forms of consumer lending include:
- Unsecured Consumer Loans: These loans do not require collateral. Customers need to prove their legal status and income to borrow from banks or reputable credit institutions. Interest rates on unsecured consumer loans are generally higher, especially when borrowing from financial companies. Loan amounts range from a few million to 50 million VND or 70 million VND at financial companies, and up to 500 million VND at banks. Common forms of unsecured consumer loans today include salary-based loans, available at many banks and credit institutions.
Benefits of Unsecured Consumer Loans:
- Meet personal and family shopping, consumption, and entertainment needs even without sufficient funds.
- No need for collateral.
- Quick procedures: If your documents are complete, with no bad debts and good income conditions, credit institutions will disburse the loan within 12 – 24 hours, usually 1 – 2 days.
- No need to prove the purpose of the loan, just ensure legal use of the funds.
- Overdraft Consumer Loans: This type of loan allows you to spend more than the actual amount in your account. The bank grants a maximum limit you can overdraw when your account balance is zero. Interest is applied to the amount that has been overdrawn.
Example: If your overdraft limit is 20 million VND, and your account has 5 million VND, you can spend up to 25 million VND. If you spend 15 million VND, interest is charged on the overdrawn 10 million VND until it is repaid.
Benefits of Overdraft Loans:
- Allows withdrawals, card swipes, and bill payments even with a zero account balance.
- High overdraft limits, up to five times the salary.
- No need for collateral.
- Immediate spending needs are met.
- Personal Consumer Loans: These loans serve personal spending needs without requiring collateral. The credit institution evaluates the borrower’s reputation and repayment ability. Loan limits are typically lower due to the absence of collateral.
Benefits of Personal Consumer Loans:
- Meet diverse needs: traveling, studying, buying vehicles, home repairs, etc.
- No collateral needed.
- Flexible interest rates for different customers.
- Flexible repayment terms reduce repayment pressure.
- Installment Consumer Loans: These loans allow customers to borrow money and repay both principal and interest in equal installments. No collateral is required.
Benefits of Installment Loans:
- Quick and convenient: Use the product immediately after completing the procedures.
- Flexible repayment terms: Choose a short or long repayment period, typically from 3 months to 60 months, depending on the loan amount.
Interest rates on consumer loans vary by loan package and calculation method.
Characteristics of Consumer Lending
- No collateral required. Credit institutions evaluate loans based on personal reputation and repayment ability.
- No need to prove the purpose of the loan.
- Quick disbursement: Same-day or within 2-3 days after receiving complete documents.
- Small loan amounts: From a few million to 50 or 70 million VND at financial companies, and larger amounts depending on income and repayment ability at banks.
- Available at banks and financial companies offering this service.
- Simple conditions and procedures: Provide personal identification and income proof documents.
Purposes of Consumer Lending
Consumer loans meet various spending needs, including:
- Purchasing furniture and household items.
- Buying vehicles, electronics, and home appliances.
- Home repairs and decoration.
- Travel and education expenses.
- General consumption, beauty, medical care, weddings, etc.
Note: All legal loan purposes are considered by credit institutions.
Consumer Lending Process
- Customer registers for a loan: Contact the financial institution’s hotline or register online to express your needs. Our specialists will provide free consultation.
- Credit officer guides you in preparing documents: Usually, the required documents include:
- ID card/citizen ID/passport.
- Household registration book, temporary residence book, or residence confirmation (if available).
- Employment contract.
- Financial proof: Salary confirmation or payslips (if receiving cash salary), bank statements (if receiving salary via bank transfer).
- Loan application form as per each bank’s regulations.
- Additional documents as required by the lending institution.
- Submit loan documents to the credit institution.
- Loan review: The lender assesses the application based on conditions like:
- Over 18 years old and possessing full legal capacity.
- Regular, stable income ensuring repayment ability.
- No bad debts.
- Legal and appropriate loan purpose according to the bank’s policies.
- Effective use of the loan funds.
- Other criteria as per the lending institution.
- Loan contract issuance: If approved, the bank or credit institution issues a loan contract for the customer to sign. Carefully review the contract, especially details about interest rates, repayment terms, and amounts due.
- Disbursement: The lender disburses the loan via cash, bank transfer, postal service, or partners. Customers collect and use the funds.
- Repayment: Customers repay the loan as per the terms in the loan contract.
Types of Consumer Lending
- Based on loan purpose:
- Resident consumer loans.
- Non-resident consumer loans.
- Based on repayment method:
- Installment consumer loans.
- Non-installment consumer loans.
- Revolving consumer loans.
- Based on debt origin:
- Indirect consumer loans.
- Direct consumer loans.
Reputable Consumer Lending Institutions
Most banks and financial companies offer consumer lending services, meeting diverse customer needs.
Advantages of Bank Loans:
- High credibility.
- Lower interest rates compared to financial companies.
- No collateral required.
- Large loan amounts from 10 million to 500 million VND.
Disadvantages of Bank Loans:
- Complex procedures with many requirements, including proving repayment ability.
- Narrower loan eligibility: Only for customers with stable incomes ensuring timely repayment.
Consumer Lending at Banks
Orient Commercial Joint Stock Bank (OCB)
- Unsecured loans.
- Simple documentation, quick procedures, favorable interest rates.
- Loan amounts up to 500 million VND.
- Flexible repayment terms up to 60 months.
- Purpose: Personal consumption.
- Flexible disbursement methods.
- Fixed monthly repayments.
Vietnam Prosperity Joint Stock Commercial Bank (VPBank)
- No collateral or company guarantees.
- Loan amounts from 30 million to 500 million VND.
- Terms from 12 to 60 months.
- Interest rates from 14% per year, on reducing balance.
- Equal monthly payments.
Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank)
- No collateral required.
- Loan amounts up to 500 million VND.
- Terms up to 60 months.
- Quick procedures, fast approval.
- Reducing balance interest rates.
- Flexible repayment terms.
Tien Phong Commercial Joint Stock Bank (TPBank)
- Unsecured personal loans: For sudden expenses, with monthly installments, up to 300 million VND, 60-month terms, 1.6% monthly interest.
- Unsecured overdraft loans: Up to 100 million VND, 10.8% annual interest.
- Savings account-based loans: Up to 80% of the savings account value, 8.28% annual interest.
- Multi-purpose cash loans: Up to 75 million VND.
Consumer Lending at Financial Companies
Financial companies focus on developing consumer lending services to meet the increasing borrowing needs of the public.
Advantages of Financial Company Loans:
- Simple, quick procedures with just an ID card and household registration.
- No collateral required.
- Broader eligibility for various customers.
Disadvantages of Financial Company Loans:
- Higher interest rates than banks.
- Risk of borrowing from shady credit institutions.
- Small loan amounts from a few million to 50 or 70 million VND.
Reputable financial companies offering consumer loans include FE Credit, Home Credit, HD SAISON, and Shinhan Finance.
In conclusion, if you have a stable, good income, bank loans offer better interest rates. However, if you need money urgently, financial companies provide quicker access to funds. Consumer lending is an effective solution for financial difficulties. Always read the loan contract carefully to ensure your rights.
