The production of auto loans globally posted good results in December, according to the latest survey of the Association of Financial Companies (ASF). While new car financing even shows a 16% annual rate, the results are more nuanced than they appear.
The LOA continues to explode to strongly advance
First, what is meant by”new car financing”? This is the joint production of earmarked credits and LOA (lease with option to purchase) dedicated to the acquisition of a vehicle. These two financial solutions alone amounted to 860 million euros in December, compared with 742 million a year earlier (+ 16%).
A result on which the LOA weighs all its weight. With € 622 million in December, activity increased by 29.1%.” It should be noted that the financing modalities have significantly changed in recent years, favoring the LOA at the expense of the financing by appropriations affected: thus the share of the LOA in total new car financing has increased from 35% in 2009 to 67% in 2016,” says the ASF.
As a reminder, the LOA is a rather special financing: you rent your car according to the duration mentioned in your contract, then at the end of it, you have the possibility of acquiring the property definitively for the payment of its residual value.
Financing allocated to new vehicles in difficulty
With regard to the auto earmarked credits, the results are a little more mixed. Starting with new car financing, the ASF recorded a drop of -8.3% in December. In contrast, the appropriations for used cars rise, them, 20.5% in the same period.
The credits allocated? These are the financing granted for the acquisition of a good (a car, equipment) or the realization of a specific service (works for example). No other benefit can be funded. This means that you only start repaying your loan after receiving the property. And this also implies that if the property is defective, you will have no monthly payment.
Good to know
How are the rates for car loans? Before you buy financing, you can get a little idea of current rates using our auto credit rate barometer.
And the consumer credit market in all of this?
The production of consumer credit is still largely up ( + 7.9% in December over one year ), but at a slower pace than in November (+ 12.3%). Standard lending operations grew by 4.6% (of which + 4.5% for restricted loans, + 9.6% for personal loans and -0.7% for revolving loans), but in a less sustained manner than LOA operations (+ 27% ).
Over the whole of 2016, the consumer credit market posted a 6.4% increase (+ 6.3% in 2015).”The overall situation is improving but the market is still degraded since with an amount of 38.8 billion euros, production remains -13% lower than its historical peak of 2007,” says the ASF.