Consumer credit:

Consumer credit is a form in which most borrowers do not need collateral. Borrowers can prove their income through bank statements in the last 3-6 months, or simply a citizen identification card.

From there, the borrower can be granted a loan from a bank or finance company, usually 10-20 million VND with just a citizen ID card, or 30-50 million VND, or even 100 million VND if there is proof of income. Another necessary condition is that the borrower must have a “clean” credit history, with no previous bad debts.

Consumer credit growth returns. Illustrative photo

However, because there is no collateral, consumer loans have to bear quite high interest rates, usually more than 20%-30%/year, not to mention principal, insurance fees, collection fees...

With a loan of 20 million VND for a period of 12 months at a finance company, customers may have to pay 2-2.225 million VND/month, including principal, interest, not including collection fees... Compulsory insurance fees correspond to about 7.5% of the loan value. If all principal, interest, fees... are included, the amount that the borrower has to pay can be up to 26 million VND.

With consumer loans from banks, the interest rate is more comfortable, but still not less than 20%/year. However, this interest rate is still "more comfortable" than black credit loans, up to nearly 50%/year. Therefore, many people are still willing to borrow consumer loans for urgent spending needs, so the consumer lending market in Vietnam still has a lot of potential.

In fact, the profits of consumer credit lending have grown very strongly recently. If in 2023, outstanding loans in this sector decreased by more than 9%, credit quality declined and the bad debt ratio increased due to slow economic growth and an unfavorable business environment, then in 2024 and the first months of 2025, this sector will recover strongly.

M-credit Finance Joint Stock Company (a joint venture between the Military Commercial Joint Stock Bank - MB and SBI Shinsei Bank - Japan) grew by 32.4%. HDSaison Joint Stock Company also grew by 13.2% in credit, thanks to the advantage of accounting for about 36% of the motorbike loan market share. This company's profit reached 1,200 billion VND, an increase of 83.9% in 2024. In 2025, HDSaison aims to achieve a profit of 1,500 billion VND. Or with FE Credit Finance Joint Stock Company, the growth also reached 10.3%, total assets reached 67,648 billion VND...

According to financial experts, consumer credit in Vietnam is attractive not only to domestic investors but also to foreign investors. However, to continue to develop, the consumer credit environment in Vietnam must be more transparent, with stricter regulations to help reduce credit risks. A comprehensive credit scoring system for individuals needs to be formed so that credit institutions can easily check people's credit history before lending, avoiding bad debt.

Regarding the consumer credit forecast in 2025, according to FiinRatings (credit rating and issuance organization), consumer financial credit will be supported by positive signs from the macroeconomic environment, the recovery of manufacturing and export industries, or improved credit quality.

At the same time, credit demand among low- to middle-income earners, the main customer base of consumer finance companies, has also improved. Thanks to digitization, better customer experience has helped increase customer retention rates.

In the medium and long term, according to FiinRatings, the Vietnamese consumer finance market has growth potential. In addition, after a series of mergers and acquisitions (M&A) deals, the divestment trend of some domestic banks from consumer finance companies and the deeper participation of foreign investors will create a strong restructuring in the industry.

MBS Securities Joint Stock Company believes that consumer credit will improve due to the economic recovery, with accelerated GDP growth and improved household income. In addition, the Government's support and reform policies in the consumer finance sector will encourage loan demand.

In fact, the consumer finance market has a strong attraction, with total outstanding loans serving consumer life reaching VND2.8 million billion, accounting for 20% of the total outstanding loans of the entire economy. Of which, commercial banks provide 94% and consumer finance companies contribute about 4.8%, with a total outstanding loan of VND139,000 billion.

To achieve the credit growth target of 16% this year, banks and financial companies expect strong growth in consumer credit balances, as the macro environment improves and consumer demand and household incomes improve.

Source: https://hanoimoi.vn/tin-dung-tieu-dung-lai-suat-cao-nhieu-nguoi-van-san-sang-vay-697620.html