Installment bank loan: Conditions, bank loan procedures and experience

1. What is an installment bank loan?

Installment bank loans are a form of loan that allows borrowers to repay both principal and interest in installments throughout the loan term. The installment payment period and interest rate will be agreed in advance based on the borrower's needs as well as the bank's policy, helping the borrower to be more flexible in financial management. This form of installment payment is often chosen when the borrower has a stable income and has a specific loan purpose such as buying a house, car, business investment or paying off existing debts.

Installment bank loans are increasingly popular in personal financial management thanks to the practical benefits that this form of loan brings, such as quick access to large capital sources at preferential interest rates and reducing financial pressure for borrowers. Not only that, this form of loan also helps borrowers more easily plan and manage spending.

2. Benefits of installment bank loans

Installment bank loans are an effective financial support solution, bringing many practical benefits to borrowers, meeting both urgent and long-term needs. This form is considered a smart, flexible and safe financial management tool. Specifically about the benefits of installment bank loans:

• Quickly resolve financial difficulties: Borrower Can easily access large capital to solve urgent problems or big goals such as buying a house, car, or business.,... In addition, the quick application review process helps borrowers receive the necessary money soon, ensuring no disruption to personal plans.
• Reduce financial pressure:  Instead of having to pay the entire large amount immediately, borrowers can repay each month or quarter, thereby reducing financial pressure and keeping other expenses in life stable.
• Integrate attractive incentives: Many banks today offer installment loan packages with competitive interest rates, flexible terms and special incentive programs to attract customers. At the same time, these policies also help optimize loan costs for borrowers.
• Safety and transparency: When borrowing from a bank in installments, the borrower is always provided with full information about the interest rate, installment term, amount to be paid each period and other terms. A clear loan contract ensures transparency, helping borrowers feel completely secure throughout the repayment process.
• Easy to manage and track loans: With the support of modern technology, customers can manage loans easily through mobile applications or online banking services. These tools help borrowers track repayment schedules, check interest rate fluctuations and receive reminders about payment deadlines, thereby avoiding late payments that lead to unwanted penalty fees.

3. Popular types of installment loans at banks

Currently, banks offer two popular types of installment loans: installment mortgage loans and installment unsecured loans. Customers need to consider their assets and financial capacity to choose the appropriate loan form.

3.1. Unsecured installment loan

An unsecured installment loan is a form of loan that does not require collateral. The bank will evaluate the customer's credit reputation, income capacity and credit history to determine the loan limit. The unsecured loan limit is usually 5 to 15 times the monthly income depending on bank policy, up to a maximum of several hundred million VND.

Unsecured installment loans are usually for people with stable income and consumer loan needs such as shopping, travel, tuition or small businesses but do not have collateral.

Unsecured installment loans have the advantage of quick procedures, no collateral required, so disbursement time is very fast, meeting customers' urgent financial needs.

3.2. Installment mortgage loan

Installment mortgage loans require customers to use assets they own as collateral for the loan. Collateral can be real estate, cars or other valuable assets. When the borrower is unable to repay the debt or does not fulfill the repayment obligation, the collateral will be recovered by the customer to make up for the remaining loan. The loan limit will be based on the appraised property and can be up to 70 - 100% of the property value depending on the bank's regulations.

This form of installment loan is suitable for individuals or households that own assets legally, with transparent origin and no disputes, and need large capital for house, car or business investment activities.

Installment mortgage loans have the advantage of high loan limits, flexible installment terms, can last up to 20 years and have significantly lower interest rates than unsecured loans.

4. Conditions and documents for installment bank loans

When borrowing from a bank in installments, customers need to clearly understand the necessary conditions and prepare complete documents to ensure the process is processed quickly and smoothly. Detailed information about conditions and documents for installment bank loans:

4.1. Installment loan conditions

Most banks today apply some general conditions to customers when borrowing from banks in installments as follows:

• Be a Vietnamese citizen or a foreigner legally residing in Vietnam.
• Enough 18 and not more than 70 years old at the time of loan settlement. Some banks allow loans up to age 75 with special conditions.
• Have a stable monthly income (minimum about 5 - 7 million VND) depending on loan product and bank policy. For business or freelance people, it is necessary to prove a stable source of income from business activities or rental properties.
• Good credit history, no bad debt or overdue loans.

4.2. Installment loan application

When applying for an installment bank loan, the borrower needs to prepare all the following required documents:

Legal records

• ID card/CCCD or legally valid passport
• Household registration book or temporary residence card for the borrower and the person jointly responsible for repaying the debt (if any).
• Certificate of marital status (single, married or divorced) if required.

Financial profile:

• For salaried employees: Labor contract/appointment decision, salary account statement/salary slip of the most recent 3 - 6 months.
• For business people and business owners: Business registration license,Tax payment receipts within the most recent 6 months.
• For income from rental property: Certificate of property ownership, property rental contract (such as house, land or car),...

Collateral documents (if any)

• Documents proving property ownership (red book, pink book, vehicle registration certificate,...).
• Asset valuation documents (done by banks or third parties).

Other papers and documents:

• Loan application form (according to the lending bank's form).
• Documents proving the purpose of capital use: sales contract, product quote or business plan.
• Debt repayment plan statement.

5. Procedures for bank loans in installments

Today's installment bank loan procedures have become simpler and more flexible with the development of digital technology. Borrowers can easily access capital through online loan registration in addition to registering directly at the bank as before.

Register for an installment loan online

• Step 1: Access the bank's website or Mobile banking application.
• Step 2: Search for "Installment Loans/Loans" or corresponding loan products and click "Register".
• Step 3: Fill in all information as required by the system. Upload necessary documents such as 2-sided photo ID, household registration book, bank account statement or labor contract and other documents.
• Step 4: After submitting the application, a bank staff will contact you to advise more information and confirm loan details. The bank conducts a preliminary review of the application based on the customer's personal information and credit history.
• Step 5: If the application is approved, the customer signs the loan contract online via electronic signature and waits for the loan to be disbursed to the account.

Register for an installment loan directly at the bank

• Step 1: Prepare all necessary documents for the loan process.
• Step 2: Go to the nearest bank branch or counter to register for an installment bank loan.
• Step 3: Bank staff will check the validity of the application and provide detailed advice on loan limit, interest rate, loan term as well as contract terms.
• Step 4: The bank conducts a financial assessment and the customer's ability to repay debt to decide whether to approve the loan or not. This process may take several business days.
• Step 5: If the application is approved, the customer goes to the bank to sign the loan contract. The loan is disbursed directly via bank account or cash, depending on the customer's needs.

6. How to calculate interest rate when borrowing from a bank in installments

Understanding how interest rates are calculated is an important factor so borrowers can make appropriate loan decisions and manage the loan effectively. Currently, banks often apply two main interest rate calculation methods: fixed interest rate and floating interest rate.

6.1. Fixed interest rate

Fixed interest rate is an interest rate that does not change during the loan period as agreed in the contract, and is not affected by fluctuations in the financial market. When borrowing at a fixed interest rate, the borrower knows the exact amount of interest to pay monthly, so he can build a long-term spending plan. However, this form of fixed interest rate calculation also has a disadvantage: if the market interest rate decreases, the borrower still has to pay interest at the committed fixed rate, leading to higher interest costs than the market.

Formula to calculate fixed interest rate when borrowing in installments:

Interest amount per month = Principal loan amount x Fixed interest rate (%/year)/12

Illustrative example: If you borrow 100 million VND with a fixed interest rate of 10%/year for 12 months, your monthly interest amount will be 100,000,000x10%/12 = 833,333 VND.

6.2. Floating interest rate

Floating interest rate is a type of interest rate that is adjusted periodically and regularly based on financial market fluctuations during the loan period. This interest rate is calculated by adding the base interest rate (usually prescribed by the State Bank) with the interest rate margin of each bank. The interest rate adjustment period is usually every 3, 6 or 12 months.

When borrowing capital using floating interest rates, borrowers can save costs when market interest rates decrease. However, the disadvantage of this form of interest rate calculation is that the borrower cannot clearly determine the total amount of interest during the loan term and the amount of interest may increase if the market has high interest rate fluctuations, making it difficult to estimate spending.

Formula to calculate floating interest rate when borrowing in installments:

Interest amount per month = Loan balance x floating interest rate (%/month)

In there: Floating interest rate per month = Base interest rate + Interest rate margin

Illustrative example: If you borrow 100 million VND with a base interest rate of 8%/year, an interest rate margin of 2% in the first year, the floating interest rate for the first 3 months you have to pay is 833,333 VND/month. During these three months, you pay 3 million VND in installments each month.

However, in the second quarter, the bank adjusted the interest rate with a margin of 1.8%. At this time, the floating interest rate you have to pay each month from the fourth month is: (100,000,000 - 3,000,000x3)*9.8%/12 = 743,167 VND

7. Instructions for paying bank loans in installments

Paying your loan on time not only helps maintain a good credit history but also avoids unwanted penalty fees. Borrowers can pay directly at the transaction counter or repay debt online via digital platforms. 

Pay directly at the bank

This is a traditional payment method, suitable for people who are not familiar with technology or want to communicate directly with bank staff.

• Step 1: Prepare necessary documents such as identification (ID card/CCCD, passport), loan contract code, loan account information and go to the bank's branch/transaction office during business hours
• Step 2: Ask the bank staff to assist in loan payment and submit the amount to be paid.
• Step 3: Receive payment receipt and leave. Note that you need to carefully check the information on the payment receipt to ensure the transaction has been recorded correctly.

Online payment

Online payment methods are increasingly popular thanks to their convenience and speed. Customers can pay via banking applications, e-wallets or online payment gateways.

• Step 1: Log in to your bank's Mobile Banking application on your phone.
• Step 2: Select "Loan payment", "Instalment invoice" or "Personal finance".
• Step 3: Select the loan listed on the application interface or enter the loan contract code/loan account number as required.
• Step 4: Check information and confirm payment with OTP code or fingerprint.
• Step 5: Screenshot or save the payment receipt as proof of payment.

Borrowers should note that when making online installment payments, they need to ensure they have a full internet connection, carefully check loan information and store receipts for comparison when necessary.

8. Experience in safe and effective installment loans

Installment bank loans are a useful financial solution, but to achieve optimal results and avoid risks, borrowers need to clearly understand financial management experiences and strategies when borrowing:

• Determine the purpose of the installment loan: For consumer loans or to address essential needs in life, it is necessary to ensure that the loan amount does not exceed payment ability. On the contrary, for business development loans, borrowers need to note that revenue and profits will be enough to offset loan costs and interest rates.
• Choose the appropriate loan form: Unsecured loans will be suitable for people who need money urgently and do not have collateral, but often have high interest rates. Meanwhile, mortgage loans will have more preferential interest rates but the procedures are complicated.
• Choose the appropriate interest rate calculation type and installment term: Depending on the payment conditions, choose the appropriate interest rate calculation and installment term to suit your current financial capacity, avoid a term that is too short, causing difficulty in payment, or a term that is too long, increasing the amount of interest payable.
• Make a clear and specific debt repayment plan: Before borrowing, make a detailed financial plan, including your income, expenses and monthly payments. In addition, don't forget to take into account unexpected costs, such as interest rates and penalties for late repayment. 
• Compare loan packages between banks: Each bank has its own policy on interest rates, loan duration, related fees and flexibility in adjusting installment terms. Therefore, borrowers need to compare loan packages to ensure the ability to receive support and save costs as much as possible during the loan process.
• Risks to avoid: One of the big risks when borrowing in installments is the penalty interest rate if payment is late and the impact on personal credit score. To avoid falling into this situation, borrowers need to make sure they have enough money to repay the loan on time.

Choose a safe and reputable installment loan address: Choose a bank with a long history, a wide branch system and reasonable interest rates. Reputable banks often provide clear, transparent services and dedicated customer support, helping customers feel more secure when borrowing capital.

9. Installment loan at SeABank - quick disbursement, enjoy many benefits

Currently, nrows SeABank has been affirming its strong position in the banking industry with diverse, flexible financial services and dedicated customer service. SeABank always focuses on improving and enhancing service quality, creating financial solutions suitable to each customer's needs, including convenient installment loan packages.

Installment loans at SeABank are one of the products chosen by many customers thanks to quick disbursement, attractive preferential policies and flexible support for customers:

• Diverse products: Loan packages at SeABank are optimized for each category such as buying a house, buying a car, business and each type of customer such as teachers, labour officials, public employees or the Women's Union, helping to provide maximum support to each customer group in accessing appropriate financial resources.
• Quick disbursement: SeABank is committed to quick disbursement, helping customers immediately have capital to meet urgent financial needs. The loan application appraisal process is carried out quickly.
• Simple and transparent procedures: The loan process at SeABank is simplified to save working time for customers. All terms, interest rates, fees and details related to the loan are public and transparent in the contract.
• Competitive interest rates: Installment loan interest rates at SeABank are always reasonable and competitive, helping customers save financial costs.
• Time Flexible loan term: Depending on the credit product, timePayment terms at SeABank can be flexible and last up to 35 years depending on the customer's financial ability, thereby ensuring that customers can repay debt without facing great financial pressure.
• Support personal finance tracking tools: SeABank's SeAMobile application helps customers easily track their loans, pay debts on time and support effective personal financial management.

With these outstanding benefits, installment loans at SeABank are a worthy choice for those looking for a flexible, transparent and easy-to-manage financial solution.

Installment loan products being applied at SeABank:

Mortgage consumer loans:

• Loans to buy, build, and repair houses - SeAHome
• SeAFlex consumer loan
• Car loan - SeACar

Loans to individuals and businesses: SeAPRO

Unsecured consumer loans:

• Loans for Teachers, Civil Servants, and Public Employees
• Loans to the Women's Union
• Installment Loans
• For more detailed information about loan products at SeABank, please contact the hotline for advice or visit the website. https://www.seabank.com.vn/ca-nhan/tin-dung.13.

10. Answers to frequently asked questions about installment loans?

Below are answers to some frequently asked questions from customers during the consulting and installment loan implementation process:

Can I borrow in installments with bad credit history?

People with bad credit history (such as bad debt, past due loan payments) are often limited from installment loans. However, some banks can still accept loan applications from customers with bad credit history with accompanying conditions such as higher interest rates, collateral requirements or documents proving stable income and ability to repay debt.

Is it possible to pay early and what are the costs incurred?

Borrowers can completely repay debt before maturity (or pay early) when borrowing from banks in installments. However, this early payment may be subject to an early repayment fee, usually calculated as a percentage of the remaining loan amount or by the number of remaining terms. The purpose of this fee is for the bank to compensate for lost costs due to the customer not completing the loan contract within the agreed time.

Installment bank loans are a flexible financial solution, helping borrowers realize their dreams and support life stability. With preferential interest rates, simple procedures and quick disbursement time, SeABank is committed to bringing you the best service experience. Contact now for a free consultation!