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Loaning without mortgaged assets: Many offers, few contracts
Commercial banks say they are laying down the red carpet to welcome clients who come for consumer loans. Meanwhile, clients are saying that they cannot access bank loans.
High credit limits and long-term loans with soft lending interest rates are the favorable conditions banks are offering to clients. A lot of people, attracted by the impressive advertisements, thought that the door to consumer loans has been widened, and came to banks. But they returned from the banks without loans.
Noisy advertisement campaigns
The Saigon-Hanoi Bank (SHB) has announced an attractive program on consumer credit without requirements for mortgaged assets. Clients can borrow up to VND300 million for a maximum of 48 months, or a sum of money equal to 12 times of the clients’ monthly income.
Lien Viet Bank has set the consumer credit limit of VND500 million for a maximum of 36 months.
Currently, the maximum consumer credit limit is hovering at around VND200 million and VND500 million, without any mortgaged assets. The loaning procedures have also been advertised as simple, which aims to create the most favorable conditions for clients to get loans. Some banks even offer insurance policies and other products to borrowers.
The door opens, but…
Commercial banks appear to have opened their doors to welcome clients. However, in fact, it is not so easy to get loans from them.
The conditions for getting loans, which have been advertised by banks as ‘flexible’ and ‘simple,’ turn out to be very strict. Most banks require borrowers to have a stable monthly income of VND5 million/person, and some others banks even require VND6 million or VND7 million. Moreover, in order to be eligible to borrow loans from several banks, the client must hold the post of being the head of a division in a company, or higher. Some banks even stipulate the number of employees the head of the divisions needs to have.
“We are repairing our home, and we lack approximately VND20-30 million. We have contacted a lot of banks. All of them require each of us to have an income of VND5 million. If I could earn VND5 million a month, I would not have to borrow from banks,” Nam, who works for a joint-stock company, said, adding that the requirement for an income of VND5 million is proving to be an overly high requirement.
Commercial banks said that the lending interest rates are different, depending on the loans, term of the loan, and the clients’ conditions. In fact, the interest rates are hovering between 12% and 15% which proves to be relatively high in comparison with the current interest rates on the market, and the income of people in the context of the global economic recession.
Meanwhile, clients seem to be hesitant in accessing consumer loans as they are not sure about the interest rates for the whole life of the credit contracts. As most consumer credit contracts are long-term (several years), the interest rates may be adjusted in accordance with the market conditions.
For all those reasons, though the door to consumer credit without mortgaged assets has opened up more, the cautiousness of both the lenders and borrowers will make the consumer credit market quiet.
VietNamNet, VnMedia
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