The car market drinks whey. While vehicle registrations end 2017 in a bumpy ride, the production of auto loans follows the same frantic pace. The latest figures from the french financial association confirm the good health of car financing.
More than 20% growth in October
The results published by the ASF are impressive: + 21.2% for automotive loans for new vehicles (+ 18%). This result marks an acceleration after the slowdown in September (+ 11%). In terms of volume, the production of auto loans is worth 831 million euros in October.
For the ASF, there is no doubt that auto loans for new vehicles constitute the” main driver of the recovery of the consumer credit market”. And to add that” the development of the supported operations of LOA (+ 28.7% in October 2017 and + 27.6% over the last three months) contrasts with the performance of financing by appropriations affected (+ 4% in October and -1.5% in average over the last three months).”
Auto credit, credit affected and LOA, what differences?
In reality, auto credit is a consumer credit behind which institutions offer an assigned credit, a personal loan or a lease with an option to purchase (more commonly known as LOA).
The assigned credit can only finance a specific good or service, which allows the borrower to be protected in the event of non-delivery or defect of the good.
On the other hand, with a personal loan, no need to explain to the lender why you need funds. So you can very well use the money to buy a car and some electrical equipment. The other side of the coin: if the goods are not delivered on time, you will not be protected, you will have to repay your loan.
As for LOA (lease with option to buy), this solution allows the driver to rent a vehicle, then eventually buy it at the end of the rental period.
In the category”auto credits for new vehicles”, the ASF only takes into account the appropriations allocated and the LOA. And as explained above, LOA cars carve the lion’s share. Their production volume in November reached 635 million euros (+ 28%), well above the credits allocated to new cars (218 million euros, + 4%) and used cars (333 million euros, +14.1 %).
Auto LOAs, however, remain well below personal loans. The latter, according to the figures of the ASF, weighed 1,278 million euros (+ 1.4% increase). Another reason for this difference is that personal loans finance all types of projects, not just the purchase of a vehicle.