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Banks, manufacturers shake hands to boost loaning, car purchases
As banks’ capital become more profuse, they have been trying to push up consumer credit. The funding of the banks explains why the purchasing of cars has increased significantly in the last few months.
Banks ready
Some bankers said that they have pushed up the loaning to fund car purchases since the beginning of 2009, while others said they have been maintaining the loaning since 2008.
Lien Viet Bank is providing loans for up to 60 months to fund car purchases. Clients can mortgage the loans with the cars they plan to buy, or other assets. In the former case, the maximum value of the loans are 70% of the car values, and in the latter, clients can borrow the sum of money worth up to 90% of the mortgaged assets.
The bank also provides loans without requirement on collateral assets with the maximum value of the loans at VND 500 million and an interest rate of 1% per month.
Techcombank said that the bank is now providing loans valued at 80% of a car’s value at maximum. The interest rates are 13% for the clients in Hanoi and 14% in HCM City.
By December 2008, the bank’s outstanding loans given to fund car purchased had reportedly reached VND 1.65 trillion. It is estimated that the bank disburses for about 500 loans every month.
Do Tuyet Trinh, Business Director in charge of individual clients under VIB Bank, said that the bank is now offering the interest rates of between 11% and 14% for the loans to fund car purchases. Trinh said that funding car purchases is now one of the key products of the bank. The outstanding loans of this operation have reached VND 400 billion.
Commercial banks have been trying to shake hands with automobile manufacturers in the cooperation for mutual benefit.
On March 12, the Bank for Development and Investment of Vietnam (BIDV) and Vinaxuki signed an agreement on funding Vinaxuki truck purchases.
The bank has promised to provide the loans valued at 70% of the trucks if clients mortgage with the Vinaxuki trucks, and provide the loans valued at 100% of the trucks if clients mortgage with other assets.
Since its operation in September 2005, VInaxuki has sold 30,000 trucks.
Opportunities to buy cars
The automobile market has warmed up with a series of measures to stimulate demand.
The decision on slashing the VAT from 10% to 5% which took effect on February 1 has led the car prices down by 5% on average. The bank loans have helped the car purchases in February increase by 70%, while the truck purchases increase by 170%, over the first month of the year.
Nguyen Dinh Long, an employee of a chemical company in Hanoi, related that he has purchased a Civic 1.8MT under the installment payment via VIB bank at the interest rate of 12% per annum. He said that there is nothing to complain about the procedures for the loans.
Le Hoang Tung, Director of a mechanical company in Tu Liem district, said that his business has received a loan under the interest rate subsidy program. Tung plans to purchase a 5 tonne truck to serve his business.
VietNamNet, VnMedia
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