Consumer Credit: The Important Changes in the Second Half Of 2016
Despite the 5.7% increase in consumer credit outstandings in July, they are down slightly from May and June when they were 5.9%. However, these outstandings have been rising steadily since 2016, although with declining sectors. “Traditional” consumer loans, LOA, financing of works, Café du Patrimoine presents you with an overview of various consumer loans.
Consumer credit dynamics continue
Even though the second half shows a slowdown in the pace of consumer credit compared to the beginning of the year, the rate of growth in outstanding loans has been steadily increasing since 2015. Rates are indeed favorable to borrowers. The BF Bank has noted a drop in interest rates credits depreciable by 0.5 points since the beginning of the year. Depreciable credits allow the borrower to repay a monthly portion of the capital and a portion of the interest.
To find out more about the lowering of the legal interest rate, you can read our article Credit: how to benefit from the lowering of the legal interest rate
This dynamic is mainly due to the presence of banks that have invested directly in the market and not through specialized subsidiaries. As a result, demand is essentially due to outstanding loans from banking institutions, outstanding amounts corresponding to the total amount of credits issued by one or more financial institutions.
Thus, CA Credit recorded a production of consumer credit of 10 billion euros in the second quarter, a good record knowing that the group’s regional mutuals alone show an increase in their outstandings to 7.4% on the quarter. The production of consumer credit also jumped for the popular banks with output estimated at 7.8%.
Discover our file and comparison of the best consumer loans of the moment: Consumer credit, comparative lending organizations
Some sectors down slightly
“Standard” consumer credit operations seem to be on the decline in France. In fact, their production fell by 2.8% in June, reaching 2.977 billion euros. This decline is seen more on the side of the credits related to the purchase of a new vehicle which are less and less solicited (-12.9%). Experts fear that there is no link between confidence and the rise in consumer credit.
Only the consumer credit sector for the purchase of a used car has risen by 3.1%, which is now heavier than the consumer credit linked to the purchase of a new vehicle .
Consumer credit failed to peak in 2008
The French seem to have returned to consumer credit but the trend of 2008 has not been found. If before the crisis, the rates were relatively attractive resulting in an increase in consumption, when the difficulties have impacted the daily lives of the French, they have slowed their demand for consumer credit setting aside their projects. Eight years later, the context becomes interesting again for the actors of this market. The appearance of certain tools such as the consumer credit simulator should encourage its production by allowing the French to realize their wishes: holiday projects, work projects, etc.
Lease with purchase option in strong progression
Lease transactions with call option (LOA) increased by 40% in the first half compared to 2015. This represents a total of € 2,530 million of financing even though conventional loans allocated to the purchase of new cars is estimated at EUR 1 424 million. How to explain this craze? The LOA appeal to French customers by their freedom of choice at the end of the lease. Indeed, it is possible to buy the vehicle by paying the amount known from the purchase or leave with another rental. New cars represent the majority of LOA operations, nearly 85% in June 2016.
The development of consumer credit will be necessary in the future. This requires an adaptation of its distribution to new technologies: it must be both connected, fast and personalized.
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