Following the current trend of globalization, many forms of lending by banks have become easier for customers. With only some basic personal documents, an individual customer is also eligible to be granted a credit card with a limit of up to tens to hundreds of millions of VND. Consumer lending has become too easy, creating conditions for consumers to actively shop, creating growth momentum for the economy. However, opening a bank’s credit card becoming too easily also poses a risk of bad debt to society. What is the reason for this problem? Let’s find out with TNTP in the following article.
1. Credit lending activities of banks with individual customers
Currently, it is extremely easy to get a consumer loan and open a credit card at banks, with just a Citizen ID with a screenshot of the operation at the bank, or even just a simple operation through the app, the borrower is fully eligible to open a credit card with a limit of tens or even hundreds of millions of dong.
The more convenient the credit card opening service, the easier it is to meet the loan conditions, and the quick loan procedures have brought the bank more customers and also directly contributed to the development of the purchasing power and consumption activities of society. When buyers do not have enough financial capacity but have a need to buy products or use services, banks act as financial intermediaries between buyers and sellers. The bank will use its own money to lend to the buyer at an interest rate proportional to the loan the buyer uses to pay for its products and services.
2. Risks of personal credit lending
The ease of obtaining credit has attracted many customers, most of whom are young people – the generation heavily influenced by consumerism and the increasingly luxurious lifestyle promoted by mass media.
After losing the ability to control desires and being willing to pay tens of millions for expensive items, luxury items because the loan amount is easily obtained with the winged exhortation: “Spend first – pay later” from banks, new borrowers are really startled because the principal amount plus interest has gone beyond their ability to pay. At that time, borrowers will have to face debt recovery measures, along with increasing interest over time of late payment. Unplanned spending and excessive spending will directly lead to bad debt risk.
After taking credit, the borrower will be classified into debt groups, and depending on the amount of debt and the delay time, the borrower’s reputation with the bank will decrease. At that time, it will be difficult for the borrower to access the loan services of other banks, because when a borrower has a low credit rating, it will be difficult for the bank to recover the money.
In addition, not to mention the subjective factors from the borrowers themselves when they turn themselves into debtors when they are unable to pay, paying via credit card without entering the PIN code also makes the loss of money. card seriously affects customers. When a stranger owns a customer’s credit card, they can completely process the payment with only the information available on the card without having to perform any other authentication. Therefore, in case the credit card is lost but the owner does not perform an emergency card lock, the user is completely at risk.
Once you have become a creditor, the bank will take the necessary debt collection measures to request repayment, from contacting, and reminding payment by phone, or email to legal measures. like filing a lawsuit in court. These will be measures to ensure that borrowers will have to fulfill their debt repayment obligations whether they like it or not.
Above is an article about the potential risks of bad debt from credit lending activities of banks. Hope this article is useful to the readers.
