Bank loan VND 1 billion: How much is interest rate?

1. Interest rate when borrowing 1 billion VND from a bank

The interest rate when borrowing from a bank an amount of 1 billion VND will be different, depending on each bank, usually ranging from 5.99 – 24%/year. This loan interest rate tvaries depending on the type of loan such as unsecured loan, mortgage or installment payment, interest rate incentives and loan term...

At NSoutheast Asia Commercial Joint Stock Bank SeABank, customers are provided with a variety of different loan packages for buying a house, car, studying abroad... with attractive interest rates. In addition, the bank also supports customers with long-term loans with simple procedures and flexible loan packages. 

2. Formula to calculate the amount to be paid each month when borrowing 1 billion VND 

Case: Mr. Nguyen Van B borrowed 1,000,000,000 VND from the bank for a loan term of 5 years (60 months) with an expected interest rate of 6%/year.

2.1. Calculated according to the decreasing balance method

Decreasing debt balance is a form of loan in which the debt amount will gradually decrease over time through regular debt payments according to a specific schedule.

To calculate the monthly payment amount according to the decreasing balance method, apply the following formula: 

Thus, applied to Mr. B's case, the amount of debt Mr. B needs to pay monthly will be calculated as follows: 

• Principal amount payable each period = 1,000,000,000 / 60 = 16,666,667 VND/month.
• Interest amount to be paid in the first month = 1,000,000,000 x 6% / 12 = 5,000,000 VND.
• First month's principal and interest payment = 5,000,000 + 16,666,667 = 21,666,667 VND.
• Interest to be paid in the second month = (1,000,000,000 - 16,666,667) x 6% / 12 = 4,916,667 VND.
• Principal and interest paid in the second month = 16,666,667 + 4,916,667 = 21,583,334 VND.

The above formula is applied to calculate the amount to be paid by Mr. B in the following months. Below is the table of principal and interest that Mr. B must pay each month for the first 6 months calculated according to the reducing balance method.

Note: Calculation results are for reference only.

2.2. Calculated based on principal balance

If interest is calculated based on the principal balance, the monthly interest will be the same throughout the loan term and is calculated on the original principal amount.

To calculate the amount of interest that needs to be paid monthly according to the principal balance method, apply the following formula: 

For example, in the case of Mr. B, when borrowing 1,000,000,000 VND for 5 years (60 months) with an interest rate of 6%/year: 

• The principal amount to be paid monthly is: 1,000,000,000 / 60 = 16,666,667 VND.
• The monthly interest payment is: [(1,000,000,000 x 6%) / 12] x 5 = 5,000,000 VND.
• Total monthly payment: 16,666,667 + 5,000,000 = 21,666,667 VND.

Note: Calculation results are for reference only. 

3. Conditions to borrow 1 billion VND at the bank 

To borrow 1 billion VND at banks, you need to ensure the following conditions: 

• Borrowers are Vietnamese citizens residing and working in provinces and cities with branches of the lending bank.
• Have a stable income and be able to repay the loan.
• The collateral must be legal and owned by the customer or a third party such as a car, real estate or savings book...
• There are no bad debts at any credit institution or bank.
• For business households, they must have a legal business registration certificate and have a feasible and effective production and business plan.

4. 4 factors that directly determine the loan interest rate of 1 billion VND at the bank

The interest rate when customers borrow 1 billion VND may vary, depending on the 4 important factors below: 

4.1. Policy of each bank

Each bank will have its own regulations and policies on interest rates for each loan package and loan product, including loans with the amount of 1 billion VND.

4.2. Loan package/loan purpose

Preferential interest rates for mortgage loans of 1 billion VND at banks usually range from 7% - 10%. After the preferential period ends, the interest rate may increase to about 10% to 12%, depending on the general financial situation in the market. 

4.3. Loan term

The interest rate will be adjusted differently based on the loan term that the customer chooses such as short-term, medium-term or long-term. Normally, interest rates for short-term or medium-term loans will be higher than for long-term loans. 

4.4. Debt repayment method is based on decreasing balance or principal balance

Choosing to repay the loan by one of these two methods not only shows how to pay the debt but also affects the amount to be paid each month. 

The reducing balance method usually helps you pay a lower interest amount over time, while the principal balance method creates interest stability throughout the loan term. You can consider your loan needs, financial capacity, loan term... to choose the most suitable repayment method.

Above is the answer to the question "What is the interest rate for a bank loan of 1 billion??” and detailed instructions on how to calculate interest by each method. If you have related questions or need a loan at SeABank Southeast Commercial Joint Stock Bank, you can contact the phone number. 1900 555 587 or visit website www.seabank.com.vn for specific advice.