THE Consumer Council of Fiji has urged consumers to be aware of the different fees and charges when taking out personal unsecured loans from banks.
Council’s officer-in-charge Bindula Devi said consumers must compare fees/charges, interest rates and other costs provided by the various banks as it could result in expensive loans.
The advice comes after the council revisited a survey this month by comparing disclosed fees/charges and interest rates between the six major financial institutions.
Ms Devi said the study looked at establishment fees, approval fees, documentation processes, interest rates, monthly service/account maintenance fees and other requirements that banks entail for providing unsecured personal loans.
“Based on a typical $3000 personal unsecured loan, the council discovered that Bank of Baroda and Westpac offer the best deal for consumers who need quick cash for the new year,” she said.
“The establishment/loan approval fees by banks range from $100 to $200 for loans amounting to $3000. Bank of Baroda charges up to $85 for documentation fees, although it has the lowest ‘establishment/loan approval fee’ of $75.
“Interestingly, Bred Bank and Bank South Pacific have the highest loan establishment fee which is $200.”
According to findings by the council, it found that monthly service/account maintenance fee ranged from no fee to a $10 fee a month.
It stated that Westpac did not have any provisions for monthly service/account maintenance fee while Bank of Baroda imposed a six-monthly maintenance fee of $20.
The council however noted that BSP charged the highest monthly account service or maintenance fee of $12.50.
Ms Devi said interest rates in the different banks varied from approximately 14 per cent to 18 per cent while HFC, ANZ, BSP and Bred Bank’s charged variable interests for unsecured loans.
“This means that the interest rates are susceptible to change by the banks at any point in time,” she said.
“Thus, consumers who unknowingly sign up for variable interest rates will not have any knowledge on the interest amount they will end up paying during the term of the loan. The terms of the unsecured loans are normally short and consumers may have difficulty paying up when interest rates are variable.”
In response to the findings by the council, Association of Banks in Fiji chairman Kevin McCarthy said all banks were mandated by the Reserve Bank of Fiji to fully disclose all fees and charges and interest rates.
“We agree that people should fully understand all the fees and charges that may apply when they take a personal loan and take the package that best suits them,” he said.
Meanwhile, the council has also urged consumers to be more responsible when borrowing from banks.
“Consumers should be aware that their financial status may change anytime due to job loss, sickness, personal disasters, rise in cost of living and so forth. Consumers are also required to understand their ability to cater for their existing and new loans by calculating their debt-to-income ratio.”
