Is borrowing money the best solution?

In 2023, the global economic recession caused many Vietnamese workers to lose income, especially freelancers. According to Decision Lab, 30% of workers saw their income decrease by 10-50%; 21% were always in a state of shortage and 56% could only survive for 1 month without financial support. In that dark picture, borrowing is the solution that many people choose.

However, borrowing money from employees is not easy when people around them also face similar difficulties. Borrowing from banks or financial companies is the solution that 72% of respondents are willing to choose. However, up to 52% do not believe they can meet the loan conditions, in which proving income and no bad debt are the biggest obstacles. Borrowing from banks is almost impossible because up to 2/3 said they do not have a labor contract or a salary statement - a mandatory condition of the bank.

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In addition, 59% of borrowers most desire transparency and openness regarding interest rates and fees from lenders. This is followed by the loan process and procedures, and the lender's reputation.

Currently, the lending market includes not only banks and finance companies but also people's credit funds and pawn shops. In the past year, pawn loans have received more attention after the police conducted administrative inspections of many pawn shops nationwide.
After the inspection, many people realized that pawnshops are also a lending field with clear regulations and sanctions and are managed by the state.

"Only borrow when you really need to."

Debt not becoming a burden needs to come from both sides, the borrower and the lender.

For borrowers, they should only borrow the amount of money they need and within their ability to pay. Currently, to encourage borrowers to borrow money, many credit institutions have streamlined procedures to make borrowing easier. This is convenient, but if they borrow without calculation, borrowers will fall into a spiral of debt. Therefore, "Only borrow when really needed" and have a clear repayment plan is the advice that lenders often emphasize.

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For credit institutions, “Responsible lending” is a measure of corporate value. This is also the reason why F88 Trading Joint Stock Company launched a TVC to convey the message of refusing to provide loans for unnecessary purposes such as gambling, entertainment and calling on people not to borrow money indiscriminately to avoid falling into a debt spiral.

"Necessary" - according to F88's definition - means borrowing for investment in production, education, medical treatment, or other legitimate purposes. Borrowing should not be used to satisfy extravagant spending or consumption beyond one's means and income.

“Borrowing wisely, borrowing for the right purpose, and borrowing within your ability to pay are things that borrowers need to be clearly aware of if they do not want to be stuck in a spiral of debt, whether with banks, finance companies or pawn shops. Then, even if they cannot be at peace with debt, at least the burden will become more bearable,” the F88 representative emphasized.

Part 1: Warning about debt spiral from 'debt busting race'

Dau Linh