Illustrative image (Source: vnexpress)
Hanoi (VNA) - Commercial banks and financial companies are fiercely competing for a slice of the profitable personal loans market as demand often rises sharply at the end of the year.

Industry insiders said the period between December till the Tet (Lunar New Year) holiday is always the most popular period for personal loans, as Vietnamese people requires money for home repair and purchase, shopping and car purchases.

To meet the rising demand, many banks are offering preferential loan packages to attract customers.

VietBank is marketing home purchase loans at an annual preferential interest rate of eight to nine percent for the first year.

An Binh Bank is offering loans for car purchase at an annual preferential interest rate of 7.49 percent.

Viet Capital Bank is even offering loans at just 6.8 percent interest per year to customers who want to buy vehicles for production and business. At Sacombank, the annual rate is 7.5 percent for the first year.

Many banks are also co-operating with production, trading and service firms to offer preferential programmes to customers who pay with credit cards.

Some lenders have even introduced personal loans worth 20 million VND to 500 million VND (890-2,230 USD) for consumption purposes, with no need for borrowers to mortgage their assets.

Experts said this upward trend will continue till the Tet holiday, which falls in February 2016. Banks will try to lure customers with low interest rates, especially for mortgage and real estate loans.

According to the State Bank of Vietnam, outstanding consumer loans as of the end of the third quarter surged 31.4 percent against December 2014. The amount accounted for eight percent of the country's total outstanding loans.

Dang Ngoc Tu, vice-head of the National Financial Supervisory Commission's policy research and co-ordination department, said the domestic consumer loans market has a lot of potential as Vietnam has 37.8 million people with stable income, of which 30 percent will be eligible for consumer loans.

The Vietnam Banks Association also estimated that consumer lending could account for 10 percent of the GDP, or more than 10 billion USD per year, in the next five years. However, experts said to attract more customers in the long run, lenders need to improve their technology, hire quality employees, diversify channels and focus on risk management.-VNA