Consumer credit: households are borrowing more and more for their projects

Consumer credit: households are borrowing more and more for their projects

Despite a more modest growth compared to previous years, the French are still seeking consumer loans to finance their projects.

 

11 billion dollars of credit cons released in Q3 2019

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With data provided anonymously by banking establishments and compiled by the French Association of Financial Companies (ASF), it emerges that loan production is growing despite a slow start to the year. In one year, mortgage off household funding has actually increased by 5.3% in Q3 2019, a fresh generation of nearly 11 billion dollars.

By accounting for the outstanding amounts released over the first 9 months of the year, which totaled 32.7 billion dollars, the market is up 2.4% year-on-year. However, compared to the dynamic increase in consumer credit in 2018, up 6.2% over the same period, this is relatively modest growth. Especially since the score is even below more distant years since the production of consumer credit increased by 5.3% in 2015, 6.4% in 2016 and 4.7% in 2017.

In detail, revolving credit jumped + 3.4% to more than 2.6 billion dollars. And certain loans for household projects are subject to sustained growth. This is particularly the case for consumer credits allocated to a project which is informed to the bank before the financing is put in place. Home improvement and home improvement loans were up 18.2%. In this category, it is possible to find work loans for example, which shows that the French are still attached to DIY and home improvement. Also in the appropriations allocated, the sums released for the purchase of used vehicles increased by 11%, while the outstandingand for the new home market fell by 2.6%.

 

Classic car credit surpassed by rental with and without purchase option

Classic car credit surpassed by rental with and without purchase option

In addition, the financing of vehicles by rental with or without purchase option overhangs conventional loans in terms of outstanding production. Specifically, all auto loans have more than 1.5 billion dollars in Q3 against 2.2 billion for rental with purchase option (LOA) and the long-term rental (LLD). This type of service is also experiencing the strongest growth with + 47.3% for the LOA of used vehicles and + 26.2% for the LLD.

Statistics do not lie on the rise in consumption habits of the population of the rental system for the acquisition of a vehicle. For households, it is common to view LOA and LLD as a service similar to real estate rental for example. However, although the payments are considered to be rent, the car rental is ultimately based on monthly payments just like a conventional consumer loan.

If a household encounters budgetary difficulties at some point, it is therefore quite possible to lower the amount of the monthly loan payments thanks to the grouping of credits which will include the LOA or LLD in addition to the loans in progress. reimbursement (consumption and immo). This operation will lead to a sufficient reduction in the amount of the new monthly payment for all the loans collected so that the household can rebalance its budget. On the other hand, the fall in monthly payments often leads to a longer repayment period but also to an increase in interest in return for benefiting from a single personalized monthly payment.

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