The car loan market it is hype: interest rates for loans has been steadily declining. The recovery of the Russian economy spur activity and bankers, and dealers.
Support of the Central Bank
Amid improving economic situation in the country and stop the falling incomes of sales in the automotive market began to grow. Bankers and dealers to stimulate sales by offering customers discounts, subsidised interest rates, various bonus programs, as well as the reduction of interest on car loan. “At the moment banks for car loans — key lending sector, which is growing rapidly. The fact that the risks are currently minimal, the dealers are willing to subsidize the rates, the creditworthiness of the customer is restored,” — said the Deputy Chairman of the Board Loko-Bank Andrey lyushin.
Lower rates are achieved by using regulatory and economic instruments. For example, to keep the inflation rate at the level of the target value of the Central Bank throughout the year reduced the key rate: if at the beginning of the year, the rate was 10%, then at the moment the rate dropped to 8.5%. “The car crediting market in Russia will continue to grow at 5-10% per year, in that case, if there is no economic shocks. In the country is increasing production of vehicles — so, this segment is becoming more attractive for banks. However, much will depend on continued state subsidies and easing monetary policy of the Central Bank”, — said the managing Director of BKS Ultima Oleg Safonov.
In the program of preferential car loans have also seen positive changes. So, if state subsidies were calculated from the key rate and accounted for 2/3 of its value (this means that if the reduction of the key rate simultaneously decreased the discount rate), then at the moment the discount is fixed and is 6.7%.
In addition, this summer the privileged state program included special conditions for the purchase of the first car and family (if they have at least two children). The programme covers the purchase of a new car 2016-2017 production, GVW not exceeding 3.5 tons and a maximum value of not more than 1 million 450 thousand virtually any. To issue such credit in some banks at the rate of 5% per annum.
Additionally, the Central Bank of the Russian Federation limits the size of interest rates, setting quarterly limit values of full cost of consumer loans. The figure demonstrates the reduction in interest rates, and commercial banks in its tariff the ruler should observe the restrictions. According to the report, the Bank of Russia, the average market value of the index the total cost of credit for 6 months of 2017 has decreased from 15,768% to 14,677%.
“Buying a car can now be much more profitable compared to the situation last year. At the same time, if the price of cars will grow, and a variety of programs to stimulate sales will be phased out, the moment becomes one of the most successful for purchase”, — said the Director of Department of development of retail business of RosEvroBank Anton Suvorkin. According to him, even the continuation of the rate cut will not impact further on the proposals of banks on car loans, because this process will take place much more slowly than in the current year. In this case, it is likely that the subsequently slower rate cuts from the Central Bank and rising demand will force banks and dealers to abandon incentive programs. However, until the end of this year, they will likely continue to spur the interest of buyers.
In addition to the monetary policy of the Central Bank on the level of interest rates is influenced by market factors. The current level of competition among automakers and commercial banks provides car buyers best car loan terms. Almost every manufacturer has its own proprietary financial program in cooperation with commercial banks under which customers provide additional benefits, such as discounts on cars, reduced interest rates, preferential insurance, etc.
The average credit period at the moment, can be defined as static. The standard range of credit terms from 12 to 60 months, but some banks are willing to offer longer periods of 72 and 84 months. “The average loan term has an effect very popular state program of preferential car loan, which loan term is not more than 36 months”, — said the Deputy head of Department of a grocery policy of Rusfinance Bank, Aleksey Bessonov.
When calculating the loan should pay attention to two key factors. First, it is important to consider the rate in the contract. Secondly, the total overpayment on the loan. This approach gives the customer a complete picture of its costs over the term of the loan, allows to objectively evaluate which period it is necessary to take loan, and choose the most suitable product.
If we consider the preferences of different client groups of banks in respect of cars, which draw a large part of the loans, the choice of brand and model often depends on the capabilities and needs of different segments of customers.
“If we talk about the mass segment, the leaders of demand are the following car brands: Lada, KIA, Hyundai, Renault, Toyota, VW, Skoda and others,” said Bessonov. Almost all of these manufacturers have in stock a reliable, proven car models in the medium price range available in the framework of the state program of preferential car loan, which is often the determining factor for purchase. According Rusfinance Bank, the list of the most sold models of cars in the Russian market included: Lada Granta, KIA Rio, Hyundai Solaris, Lada Vesta, Creta Hyundai, VW Polo, Renault Duster.
The ability of the population to take an auto loan today is associated with the implementation of the state program of preferential car loans, and concessional credit proposals of the manufacturers, where the interest rate may be more profitable. In addition, customer demand and support new banking proposals — for example, when the principal amount of the value issued loans and for a down payment on consumer credit. It turns out, purchasing a new car is becoming a reality even for those who don’t have savings.
The best credit should look for software manufacturers that are added with preferential lending programs from the state, experts believe.