Should we buy insurance for consumer loans? (P2)

In fact, many customers do not understand the importance of insurance, whether or not a credit counseling staff and a clear explanation of the benefits that it brings.

Should we buy insurance for consumer loans? (P2)

Is consumer loan insurance compulsory?

Regulation of financial companies lending to customers issued in conjunction with Decision No 1627/2001 / QD-NHNN dated 12/31/2001 of the Governor of the State Bank shall provide for the customer not to buy insurance-related loans, the borrowers at financial companies.

Thus, buyers of credit insurance against loan agreement between financial companies and borrowers on a voluntary basis by the parties. The purchase of insurance related to loans by financial companies and customer agreements in conformity with the law on insurance, ensuring customers will be offset in part or all of the loss in case of risks in coverage and contribute financial companies control credit quality.

According to company representatives FE Credit financing, insurance is one of the business agreement between the insurance business with clients in the insurance contract. In the case of insurance agents financial companies made for insurance businesses, financial companies only perform premiums under the authorization of business insurance business under the provisions of Clause 4, Article 3 of Joint Circular No. 86 / 2014 / BTC-SBV TTLT.

Unsecured consumer loans carry many risks for the support lending because there is no collateral. When borrowers unfortunately fell into the force majeure circumstances, the ability to recover the debt will face many difficulties. To ensure the safety of loans, the financial companies normally attach more "insured loans" to the customer's unfortunate inability to pay, the insurance company will pay to replace. Therefore, the lender will be assured and easier when approving loans for customers who buy insurance registration. Not only that, the loan insurance also helps reduce anxiety financial companies consumer loans.

For unsecured borrowers have wage income proves good (customers pay the loan statement, customers do in large organizations reputation ...), you could still skip loan insurance by the lending risk is lower. Most current forms of loans are graded according to the method of "punching" and clients just pass score requirements to be eligible for loans.

How much is consumer loan insurance fee?

Usually insurance accounted for 5% loans - 6% on the principal amount that customers registered mortgage loan at the bank. For example, when customers sign contracts at financial companies borrow 20 million to buy the product, the sum insured loan: 5.5% x 20,000,000 = 1,100,000 VND.

Depending on the financial companies, when customers registered mortgage loan may not receive the full amount of loans that have registered 5.5% deduction to pay premiums or customers will receive the full amount plus amounts borrowed register insurance fees.

For example, if customers not receiving the full amount of the loan: Customers registered 20 million loan it receives only 18.9 million (minus 1.1 million insurance money loan), then buy products with $ 18.9 million. In case the customer will receive a full 20 million and financial companiesse borrowers record amount of 21.1 million.

In summary, loan insurance is an expense that is not required when clients go chap.Tuy fuel consumer credit, loan insurance are encouraged to buy because it is completely beneficial to customers and partly support financial companies in controlling credit quality. Therefore, the financial companies need specific advice, clear and transparent to clients and customers need to actively learn and ask clearly consult your counselor about your problem has not really understand, to avoid unnecessary misunderstandings ensued after contracting loans. /.