Instalment payment services from retailers and consumer loans from banks are becoming increasingly popular among Vietnamese people because of their convenience. While most consumers using such services do not have the money to buy the products they need or want at the time of purchase, some are able to pay in full but still use these services because they prefer to spend their savings on other things. Others simply don’t wish to use these services because they are afraid of racking up debts and would only use such services when they have no other choice.

“Although I had the money to buy a motor car I decided to take out a loan from Sacombank. I borrowed VND500 million, or 70 per cent of the car’s value, over a 36-month term at an interest rate of 9 per cent per annum for the first six months and then the bank deposit rate plus 3 per cent. The interest rate is adjusted every three months. I decided to take out a loan because with this amount of money I can do many other things, whereas I only have to pay about VND21 million to the bank in interest. To take out the loan I needed to complete a collateral asset document (including the car purchase contract and red receipt), take out insurance, and provide copies of the car’s registration certificate. The procedures were quite quick and simple and presented no difficulties. The interest rate, though, is quite high, and I was hoping that the bank would lend me more than 70 per cent of the car’s value. If I ever needed to borrow less than VND100 million, a bank loan would be the last resort.”

Ms Phung Thi Van Lien
MAG Commercial Company

“I bought an iPhone 5S at a Viettel mobile phone shop under an instalment payment plan. Before deciding to use the service I inquired as to the cost and the procedures at several mobile shops and electric supermarkets. The iPhone cost VND16 million, which was the lowest I could find. I had to pay 30 per cent up front, with the balance being paid in monthly instalments of VND1.3 million over the course of 12 months. My current monthly salary of VND7.5 million allows me to pay this amount with little difficulty. I decided to use Viettel’s instalment payment service because I didn’t have enough money at the time and I didn’t want to wait until I did. The procedures were very simple. I just had to present my identification card, a copy of my family register and the phone numbers of three relatives or friends. In about 30 minutes I had the smart phone I had dreamt of having for a long time. The total cost of the phone will be around VND18 million, which is acceptable.”

Mr Nguyen Van Thanh
University Teacher, Hanoi

“I bought a laptop under an instalment payment plan over one year at an electronics supermarket last year. The laptop cost VND10 million and while I was able to pay in full I preferred to use the instalment service because I only had to pay around VND1 million each month, so I could use my savings on business expenses. It’s convenient and the procedures are very simple. I advised my friends to use the service, but anyone doing so should research prices and interest rates carefully before making a decision. People should not buy under an instalment payment plan at retailers that apply a fluctuating interest rate, because they may be trapped by high interest payments.”

Mr Vu Quang Chien
Auto parts business owner, Hanoi

“I have never used the instalment payment services of electronic supermarkets or mobile phone stores and probably never will. If you want to buy something so much you should borrow the money from relatives or friends. No one should believe claims of 0 per cent interest - everything has a cost attached. I would only borrow from a bank if I really needed the money and had no other choice. If there was ever something I really needed but didn’t have the money to buy it, I would carefully research the difference between borrowing from a bank and using the instalment payment services of electronic supermarkets and decide which is cheaper. The procedures at electronic supermarkets appear to be much simpler and quicker than at banks. For people not from Hanoi, like me, the procedures for taking out a bank loan are much more complex. But if the amount I had to pay in total was less at a bank then I would complete these procedures, complex or not.”

Mr Lai Van Dai
Harmonysoft Company

“Providers of these services always give the impression that customers don’t end up paying too much extra money to buy the products they want. But simple calculations should tell customers that they do actually end up paying a lot more if they take out a loan or sign up to a monthly instalment plan. I don’t use these services. I buy a product when I have the money to do so, and it must be essential for my job or my family. I think the customers of these services tend to be young people, who lack knowledge and are easily enticed by an attractive sales pitch.”

Ms Le Thi Thuy Lan
Mizuho Corporate Bank

“I haven’t used instalment payment services yet, but I think they are useful. I would only use the service if I really needed to buy a laptop, for example, for my studies or my job but didn’t have enough money at the time. I would compare prices and procedures at several electronics supermarkets to determine which one offer the best price and simplest procedures. I hope that providers of this service introduce supportive policies so that students like me can buy a product in the quickest possible time, with the simplest procedures and at the cheapest price.”

Mr Le Hoang Hiep
University student, Hanoi