Correct the "gold and brass" situation in consumer lending
Hello everyone! I'm Daniel Linares, your trusted voice for financial insights at https://www.financenewsrd.blogspot.com.
If you've been feeling the pinch in your wallet lately, you aren't alone. Today, we are discussing a critical situation that has been unfolding since the second half of 2022 and has reached a boiling point in 2026: the crisis of consumer credit.
We are seeing a perfect storm where bad debt is skyrocketing, mainstream lenders are struggling to recover funds, and "black credit" apps are causing chaos in our communities. As an analyst, I believe it is vital to understand the difference between legitimate consumer finance and the predatory traps that are popping up everywhere.
Let’s dive into the state of the market and what needs to change to protect both lenders and borrowers.
The Consumer Credit Crisis: Why Debt Recovery is the New Frontier
After years of breakneck growth, the consumer credit market has hit a massive wall. Since mid-2022, outstanding loans have plummeted. For the 16 mainstream consumer finance companies licensed by the State Bank, the struggle is real: loans decreased by over 10% compared to the end of 2022.
But the real alarm isn't just the lack of lending—it's the explosion of bad debt. According to FiinGroup, the bad debt ratio jumped from 10.7% to a staggering 12.5% in just six months.
My Personal Experience: The Day a "Small Loan" Turned into a Nightmare
I want to be transparent with you all. A few years ago, a close friend of mine was struggling with an unexpected medical bill. He didn't want to go through the "hassle" of a commercial bank, so he downloaded a quick-loan app. It looked professional, used a logo similar to a well-known bank, and promised money in minutes.
What followed was a descent into financial hell. That small 2 million VND loan spiraled into tens of millions due to hidden fees and predatory interest rates. When he couldn't pay, "gangster" debt collectors began terrorizing his contacts.
This experience taught me that financial literacy is our best defense. It's why I am so passionate about helping you distinguish between official credit and the "black credit" predators that give the entire industry a bad name.
Why the Market is Stalling: The Economic Reality
The decline in consumer demand isn't happening in a vacuum. The data from the General Statistics Office is sobering:
Business Closures: An average of 15,000 businesses per month withdrew from the market in 2023.
Unemployment: This led to a sharp decline in workers' income, causing demand to hit rock bottom.
Retail Slump: Major giants like Mobile World, Dien May Xanh, and FPT Shop have all seen negative revenue growth.
When people lose their jobs, they stop buying motorbikes and electronics. When they stop buying, they stop using consumer credit. It’s a vicious cycle that is putting immense pressure on the capital adequacy of finance companies.
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Identifying the Enemy: Official Credit vs. "Black Credit"
One of the biggest hurdles for the industry is that society often confuses legitimate consumer finance with illegal "black credit" apps.
| Feature | Licensed Finance Companies | "Black Credit" Apps |
| Regulation | Strict Legal Framework (State Bank) | None / Illegal |
| Interest Rates | Regulated and Transparent | Extremely High / Hidden Fees |
| Debt Collection | Ethical / Legal Procedures | Terrorizing / Harassment |
| Data Privacy | Protected by Law | Mortgaging Phone Contacts/Photos |
| Identity | 16 Official Companies | Hundreds of Fakes / Impersonators |
The "Debt Boom" and the Fraud Epidemic
We are seeing an alarming rise in debt fraud. Because there are so many fake apps, many borrowers have adopted a "debt boom" mentality, thinking they don't have to pay back anyone.
Lawyer Nguyen The Truyen points out a harsh reality: official companies rarely use courts for small debts because the cost and time are too high. This creates a loophole that fraudsters exploit.
Strategic Recommendations: How We Fix the System
Based on my analysis at Finance News RD, there are four key pillars needed to stabilize the consumer finance sector:
1. Separate Regulations
We cannot treat a consumer finance company like a commercial bank. They have a different risk appetite and serve "subprime" customers who are the first to feel an economic hit. We need specific risk control regulations that fit their unique business model.
2. Legalize Professional Debt Recovery
Currently, professional debt collection is prohibited in Vietnam (Investment Law 2020). However, Lawyer Truyen and other experts suggest we need a legal corridor for reputable, professional recovery teams to operate. This would save resources and increase the capital adequacy ratio of lenders.
3. Use Jurisdictional Centers
Instead of long court battles, we should utilize jurisdiction centers. They can issue judgments quickly, ensuring there is a "consequence" hanging over the head of anyone who deliberately defaults on a loan.
4. Technology & Authentication
We must promote the use of population data to authenticate borrowers. By verifying SIM cards and phone numbers, we can prevent identity theft and ensure the person borrowing is who they say they are.
Frequently Asked Questions (FAQ)
Q: Is it a crime to not pay back a consumer loan?
A: Yes. Deliberately refusing to pay back even a small amount can lead to criminal prosecution for abuse of trust and appropriation of property.
Q: How do I know if an app is an official finance company?
A: Check the list of the 16 companies licensed by the State Bank. Avoid any app that asks for access to your entire contact list or gallery as a "mortgage."
Q: Why are interest rates higher at finance companies than banks?
A: Because they take on much higher risk by lending to people who may not have collateral or a perfect credit history. This "risk premium" is reflected in the rate.
Final Thoughts: Restoring Trust in Finance
The consumer credit sector is at a crossroads. To move forward, we must close the legal loopholes and protect the 16 legitimate companies that provide essential services to the public.
As Daniel Linares, my goal is to keep you informed so you can navigate these waters safely. Don't fall for the "quick cash" trap of fake apps, and remember that a healthy credit history is your most valuable asset in the long run.
Have you had an experience with a consumer loan app—good or bad? Are you seeing more "black credit" warnings in your area? Let's discuss it in the comments below!
Written by: Daniel Linares - Admin of
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