In Vietnam, instant online personal loans a poisoned chalice for borrowers

Mobile apps that offer instant personal loans with no need for proof of repayment capacity are mushrooming in Vietnam, but consequences can be grave for borrowers who are tricked into taking easy loans only to be stuck with through-the-roof interest rates.

A loan applied through such apps as Cashwagon, iDong or Doctor Dong is typically approved within minutes, with the only requirements being the borrower’s name, national ID number, and a bank account through which they wish to receive the loan.

Binh, a resident in Go Vap District, Ho Chi Minh City, said his debts had amounted to VND2.34 million (US$100) only two weeks after taking out a loan of VND1.26 million ($78) from VDong, an instant personal loan app.

Similarly, Dong, a resident in District 12, Ho Chi Minh City, was asked to repay VND3.87 million ($167) less than two months after receiving a loan of VND2 million ($86) from the Doctor Dong app.

Borrowers who fail to repay their debts in time are threatened with violence or even death from debt collectors, Dong said.

These apps also demand access to the borrowers’ list of contacts stored on their phones, which is used to acquire phone numbers of friends and relatives of the loan taker.

In many cases, these friends and relatives would receive threatening messages despite knowing nothing about the loan.

“They would call and send text messages threatening to hire gangsters to work on my case, using vulgar language and made me genuine fear for my life,” Tien said.

Some apps, such as Cashwagon, even go as far as transferring money to app users who don’t apply for any loan and claim that the transaction is a “mistake”.

O., a worker in Dong Nai Province in southern Vietnam, soon learnt the hard truth after receiving VND2.5 million ($108) in ‘loan’ out of nowhere from Cashwagon.

“After transferring the money back per their instruction, I discovered that my loan contract was not voided, meaning that I would still have to pay interests incurring from the original ‘loan’,” she said.

Peer-to-peer (P2P) lending is also popular in Vietnam, as a person with idle cash can easily and anonymously lend their money to those in need through a third party that is online applications., a peer lending platform, said it had facilitated more than VND64 trillion ($2.76 billion) in loans as of Monday since it went online in June 2016.

On average, around 6,000 loan requests are made through the platform on a daily basis.

Around 30-50 percent of instant personal loan apps or P2P lending platforms in Vietnam originate from China, according to Truong Thanh Duc, a Vietnamese lawyer.

These businesses are often officially registered as investment consultancies or commercial services company to disguise their actual lending activity.

“Their target customers are those who are after quick money on short-term loans with high interest rates,” Duc said.

In the P2P model, the lender is at risk of losing their money since the platform only serves the role of a third-party intermediary that may not be legally responsible for loans made through their platform.

The Vietnam Competition Authority (VCA) has issued an official warning about these online instant loan apps, advising the public to be wary of their interest rates as well as terms and conditions before making an application.

“Before providing these apps with your personal information, the loan taker should also fully understand their data collection policy,” VCA advises.


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