The production of financing for new vehicles continues to increase at a brisk pace. The latest survey published by the French Association of Financial Companies (ASF) reports an increase of nearly 20% in January annual rate. In comparison, the consumer credit market as a whole is ” only ” increasing by 13%.
The auto credit segment masks disparities, however, depending on the financing and type of vehicle (new or old).
LOAs that explode.
An increase of 19.6% (+ 16% in December) over 1 year. this is an unequivocal evolution. In terms of production, this represents 651 million euros, against 544 million euros a year earlier in the corresponding period.
However, these results should be qualified a little because they include two types of credit that do not evolve in exactly the same way.
The loans in question are the LOA (auto lease option) and the auto assigned credit. Let’s start with the 1st. This is a financial solution that alternates leasing and financing: you rent out your vehicle first and then, at the end of the contract, you have the possibility to acquire it definitively with the payment of its residual value.
This type of operation is booming (+ 40.3%), weighing 459 million euros in January in terms of production.
Mixed evolution for auto earmarked credits
On the other hand, the self-assigned credit segment tends to contract. The production reached in January 192 million for the financing of new vehicles (-11.5% on one year, against -8.3% in December). On the second-hand side, the trend is the opposite and shows a dynamic increase of 12.5% to 264 million euros. Signs of slowing down are however noticeable since this segment recorded + 20.5% in December.
As a reminder, the appropriations allocated are for a type of consumer credit where the financing and the purchased property are intrinsically linked. By extension, the auto assigned loan is attached to the acquisition of a vehicle.
In other words, the loan can only finance a specific good or service (here, a car), unlike the personal loan that can finance everything without the need for justification from the borrower. What does this entail? It’s simple. With the credit allocated, you only start repaying your credit after delivery of the goods. Similarly, if it is defective, you will pay no monthly payment.
Are you thinking of buying a new vehicle? Feel free to carry out a car credit simulation to know your future monthly payments.
Consumer credit market still on the rise
After slowing down in December, the production of consumer credit accelerated in January: + 13%, against + 7.9% in December 2016 and + 12.3% in November 2016. The overall amount amounts to € 3 118 million. ” Although the market is globally oriented, it remains very degraded because at the end of January, the cumulative production of the last twelve months was still -12.9% lower than the high point reached in September 2008, ” says the ASF.
A last word on the classic credit operations (different from the LOA). It climbed + 9.3% (+ 4.6% a month ago), a figure covering an increase of:
+ 5.1% of the appropriations allocated;
+ 2.8% of revolving loans;
+ 18.8% of personal loans.