Hanoi (VNS/VNA) – Consumer finance companies are offering variouspromotions to customers, aiming to enlarge their share in an increasinglycompetitive market.

FE Credit, currently the country’s largest consumer financecompany with a market share of more than 50 percent, is currently offeringdozens of promotions, such as purchase via installment for Oppo phones, Daikinair-conditioners with zero per cent interest and purchase via installment forHonda and Yamaha motorbikes with an interest rate of only 0.99 percent.

FE Credit’s rivals, like Home Credit and HD Saison, also havesimilar programmes to attract customers, especially young people, who have highconsumption demand.

According to a representative at an electronic appliancescentre in Hanoi, consumer financial companies, which are his centre’s partners,are implementing more than 20 promotion programmes.

Consumers can take advantage of this occasion to shop nowsince there are many promotion campaigns, the representative said, explainingthat previously, for the purchase in installments of a phone or anair-conditioner, in addition to the principal, buyers had to pay some fees plusa high interest rate, but now, due to increasing competition, financial firmsare scrambling to cut interest rates and launch promotions.

Experts attributed the ease in accessing consumer credit to rising competitionpressure. If the market had only a few consumer lending companies few yearsago, it now has some 20 companies operating in the field, which has ahuge potential with annual growth rate of more than 50 percent and projectedvalue of 1 quadrillion VND (43.85 billion USD) by 2019, according to a reportfrom the Ban Viet Securities Company.

Several financial companies have also received biginvestments from foreign sources. FE Credit, for example, has raised more than 250million USD from financial giants such as Credit Suisse, Deustche Bank and LionAsia.

The new investments have helped consumer finance companiesgain capital and a more sustainable strategic vision, which have benefitedcustomers with interest rate cuts and promotion programmes.

Despite the rate cuts and promotion programmes, expertswarned that ease of access to consumer loans also has certain drawbacks.

While believing consumer credit would help economic growth in1-2 more years, Viet Dragon Securities Company (VDSC) has also warned of risks,of which the highest risk is that people may borrow money which goes beyondtheir payment capability.

According to VDSC, after analysing consumers’ behaviouraltrends, the company realised it had excessive optimism about future income.

Financial expert Dinh The Hien advised that consumers need todetermine whether loans, in cash or via installment purchases, are reallynecessary, and if they can afford them. Firms should also clarify what feeswill arise, and what penalties apply in case of late payment.

Borrowers should not rush to avoid debt defaults, Hienadvised, adding that only if all the above questions have been resolved shouldthe consumer finance loan agreement be signed.-VNS/VNA