Consumer loans’ comeback
In decline since the start of the financial crisis, disbursements now match mortgages
Consumer credit had been expanding at a 30% clip during the first half of the year, boosted by strong consumer demand and car sales, up 6.5% during the first six months of 2024.
Bank data show that disbursements of consumer loans nearly reached €650 million during the first half compared to €500 million during the same period in 2023.
Banks expect the figure to remain stable during the second half and reach €1.3 billion for the whole year, up from €1 billion in 2023.
Consumer loans were notoriously popular during the period, in the early and mid-2000s, that preceded the financial crisis. After tanking for several years, they once again reached the level of mortgages in 2023.
Of all consumer loans, 50% are simple loans concluded with banks, 30% concern buying a car, and the rest are concluded directly with retailers.
In the loans concluded with banks, the average loan is nearly €6,000, payable within four years. Car loans average €11,500, payable in 4.5 years, while loans from retailers are both much smaller and shorter-term, averaging €800 and payable in 1.5 years.
But the latter category is the fastest-growing because approval is immediate, provided – and this is the difference from 20 years ago – that the retailer accesses the borrower’s tax and credit history.
Besides buying a car, most consumer loans are used for renovations and buying household equipment. Many parents also borrow to cover the costs of their children’s studies, accommodation and spending, mostly abroad.
Interest on consumer loans, ranging between 11% and 14%, is among the highest in the eurozone, but some banks offer special rates, at around 10%, to longtime clients, especially those with a payroll or pension account.
Car loans average between 8.5% and 9%, and can go as high as 11%, but there is a lot of variety, depending on whether a vehicle is new or used and even on the brand: Banks have developed relationships with auto retailers, who, in turn, may subsidize prices.
