Zero Percent Installment in Vietnam: Fee Checklist

Zero percent installment offers let you pay for a phone, laptop or fridge in monthly parts with no stated interest. They are common at electronics retailers and banks in Vietnam. Zero interest does not always mean zero cost. This checklist shows what to read and what to ask before you sign.

What a zero percent installment offer really is

In most offers, a bank card pays the shop in full. The bank then collects the price from you in equal monthly parts. The shop or the bank may cover the interest. That is how the rate can be shown as zero.

Other charges can still appear. Some banks add a one-time conversion fee. Some add a fee if you close the plan early. Some offers need a minimum purchase or a certain card. The headline rate is only one line of the deal.

Treat the ad as a start. The signed terms are what count.

Sources: Consumer information duties under the Law on Protection of Consumers' Rights, No. 59/2010/QH12 (National Assembly of Vietnam, adopted November 2010, in force July 2011).

Check these fees first

Ask for each of these in writing. If a seller cannot answer, wait.

• Conversion fee: a one-time charge, often a percent of the price, added when the purchase is turned into installments.
• Early closing charge: the cost if you pay off the plan before the last month.
• Annual card fee: some offers need a new card, and the card may have its own yearly fee.
• Late payment charge: what you owe if you miss a month, and whether the zero rate then ends.
• Cash price: the price if you paid in full today. Some shops list a higher price for installment buyers.

Sources: the installment terms and fee schedules that each issuing bank publishes on its own website and in its branches; confirm each item with your bank and seller.

Work out the total price

Do the sum yourself. It takes two minutes.

Here is an example. A laptop costs 12,000,000 VND. The plan runs 12 months, so each part is 1,000,000 VND. Now add a 3 percent conversion fee, which is 360,000 VND. You pay 12,360,000 VND in total. The fee is the real cost of the plan.

Next compare that total with the cash price. If a shop gives a cash discount, subtract it too. A cash discount of 5 percent on 12,000,000 VND is 600,000 VND. Paying in installments then costs you 960,000 VND more than paying cash. These numbers are only an example, so use the ones on your own offer.

Sources: Worked example by the editors; the figures are illustrative, not a real offer.

Read the contract before you sign

Installment deals often come as a standard form that the seller or bank wrote. You cannot change it, but you can read it. Vietnam's Law on Protection of Consumers' Rights, which took effect in July 2011, says traders must give clear and honest information about the goods, the price and the terms of the deal. It also covers contracts written in a standard form.

Look for these points:

• The total amount you will pay, in dong, written out.
• The number of months and the date each part is due.
• Every fee, with the amount or the way it is worked out.
• What happens if you return the goods, or if the goods are faulty.
• How to close the plan early and what that costs.

Keep a copy. Take a photo of the offer terms and the shop receipt as well.

Sources: Law on Protection of Consumers' Rights, No. 59/2010/QH12, on trader information and standard contracts.

Questions to ask at the counter

Keep these short questions on your phone and read them out.

1. Is the price the same as the cash price?
2. Which fees will my card issuer charge, and when?
3. What is the total I will pay by the last month?
4. What happens if I return the item?
5. Can I close the plan early, and what does it cost?

If one answer is vague, ask for it on paper. A clear seller will give it. If the seller will not, you have learned something useful.

Also call the number on the back of your card. The bank can confirm fees that the shop cannot see.

Sources: Editors' checklist, drawn from the contract points above.

Sources

• Law on Protection of Consumers' Rights, No. 59/2010/QH12, National Assembly of Vietnam.