Vietnam: What is an installment loan? What are the documents for installment loan application? What are the important notes when applying for installment loans?
What is an installment loan?
According to the provisions of Clause 3, Article 3 of Circular 43/2016/TT-NHNN regulating consumer lending by financial companies, promulgated by the State Bank of Vietnam on the concept of installment loans, specifically as follows:
Definition
For the purposes of this Circular, the terms used herein is construed as follows:
...
3. Installment loan is defined as a form of consumer lending arrangement under which a finance company and a customer agree to repay the principal and interest in installments over a set period of time.
Vietnam: What is an installment loan? What are the documents for installment loan application? What are the important notes when applying for installment loans?
What are the important notes when applying for installment loans in Vietnam?
Choose a installment loan that suits your financial ability
You should note that the first thing you need to consider is choosing the right loan for your financial ability. Carefully consider choosing loans that suit your needs and ability to pay, avoid installment loans when your finances are unstable or exceed your monthly income.
Choose a secure and reputable financial institutions
One of the important features to note is that you should choose a secure and reputable financial institution. Learn carefully about information of financial institutions, choose reputable banks or financial institutions before borrowing to avoid scam with high interest rates.
Understand how interest and costs are calculated
Before taking out an installment loan, be clear about the monthly interest rate and the monthly specific amount. In case the contract mentions other costs incurred, you should consider and research carefully to avoid conflicts later.
Read the terms of the contract carefully before signing
Before signing the contract, you need to carefully read the terms and ask questions about the content to avoid breach of the contract and fines for not fully understanding the committed contents and terms. Pay close attention to the contract to be able to detect the unreasonable points. And when there are findings about an unreasonable point, you need to ask again carefully, to avoid conflicts and disputes later.
Pay debt and interest on time
Requirement of repayment and interest on time is one of the mandatory terms in the loan contract. Therefore, to avoid paying extra interest and being bothered by debt collection calls and messages, borrowers should repay their loans on time as agreed.
What are the current forms of installment loans?
Currently, installment loans have two main forms that people often use. These are unsecured loans and mortgage loans.
For customers who choose to apply for an unsecured loan, the advantage of unsecured loans is that the procedure is simple and quick, but the disadvantage is that it has a high interest rate and is more suitable for small loans.
For customers who choose to apply for a mortgage, the advantage of a mortgage loan is that they can get a large loan with a low interest rate and a high loan limit. The disadvantage of mortgage loans is that the procedure is quite cumbersome and complicated.
Each type of loan has its own advantages and disadvantages. However, depending on the purpose and limitations of the borrower, you can choose one of the two above methods.
What are the documents for installment loan application in Vietnam?
The application for an installment loan should depend on many different factors such as: regulations of the bank, the nature of the loan product, the purpose of the loan. However, some of the documents that customers need to have include:
- Plan to use the borrowed money according to the regulations of the financial unit.
- The customer's identity card or citizen's identity card is still valid according to the law and meets the bank's conditions.
- Household registration and temporary residence registration certificate of the customer, licensed by the competent authority.
- Documents proving the customer's ability to pay debts such as: bank statement within the last 6 months, labor contract, payroll, work confirmation, ...
For detailed and specific procedures for installment loans, each bank will now have its own regulations on procedures. Therefore, you can contact the bank you want to borrow to ask for details about the installment loan procedure.
Here is some of the information we provide to you. Best regards!
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