Expensive mileage: used car loans take a year longer to pay off than new ones
The average term of car loans for used cars has increased to 78 months. This is exactly one year longer than in the case of loans for new cars. The difference in terms was at an all-time high. The reason for the gap lies in the rise in the cost of loans for cars with mileage - buyers are trying to make the monthly payment more comfortable, increasing the duration of car loans. More about the factors affecting the situation - in the material "Izvestia".
Noticeable decline
In October 2024, banks issued 86.18 thousand car loans to Russians in the amount of 123.79 billion rubles. In annual terms, the number of issuances remained virtually unchanged, but the volume decreased by 7%. The results of car loans were summarized by the United Credit Bureau (UCB).
This year, the pace of lending in the auto segment was lower only in January, when banks issued 77.06 thousand loans amounting to Br111.22 billion.
The average volume of auto loans has decreased by 8% over the year, from Br1.56 million to Br1.44 million. At the same time, the average term of car loans increased from 67 to 70 months. In the case of car loans for new cars, it amounted to 66 months. For cars with mileage - 78 months. The difference in terms for these products is at a historical maximum.
A total of 1.17 million auto loans worth Br1.71 trillion were issued at the end of 10 months. The number of disbursements increased by 71% compared to the same period last year. The volume, in turn, increased by 75%.
In October, new cars accounted for 66% of the total number and volume of loans. Banks allocated Br59.83 billion (Br40.06 thousand) for such cars for the month. Used cars accounted for 20.57 thousand loans amounting to Br31.20 billion for the same period.
The total cost of credit (TCC) for car purchase in October rose to peak values - 23.31%. In early November, the figure increased even more and reached 24.12%. The difference between the TCOP for new and used cars is also at a historical maximum - 22 and 27%, respectively.
The average check for new cars in October amounted to Br1.49 million. For cars with mileage - Br1.51 million. However, in early November, the situation has changed dramatically. The average check for a new car reached Br1.53 million. The cost of used cars, on the contrary, decreased to Br1.42 million.
The market reacted
The reduction in car lending observed in the market is primarily due to the actions of the Russian Central Bank aimed at cooling retail lending, says Nikolai Filippov, Director of Risk Management Methodology and Data Analytics of the United Credit Bureau.
- First of all, the moratorium on the application of restrictions on the full value of loans was canceled, and the maximum values of the CBR established by the maximum values of PSC for the current market situation is quite strict: 28% per annum for loans for new cars and 29% for cars with mileage, - says the expert.
In the case of government programs, the rate should not exceed the key rate by more than 5%, he specifies. That is, it can not be more than 26% per annum. Meanwhile, after the increase in the key rate, attracting new financing has become very expensive, it reaches 22-23%.
- At the same time , in order to maintain the margin, the difference between the price of raising funds and the price of the loan must include the growing credit risks, and huge commissions to dealers, reaching 6-8% of the loan amount, and operating costs, also growing against inflation. All this greatly reduces the already low margin of car loans, and in the segment of customers with high risk and makes car loans unprofitable, - emphasizes Filippov.
The second important aspect is the introduction on July 1 of surcharges to risk coefficients for car loans to customers with high debt load.
- On the one hand, this is not an explicit ban, so the market reacted to the new regulatory requirements somewhat inertly, spending almost a quarter to comprehend them and take them into account in decision-making strategies. On the other hand, due to the direct impact of these restrictions on the return on capital, lending banks, unable to raise rates and thereby compensate for the decline in profitability, are forced to adapt to all the changes and reduce lending where it is no longer economically feasible," explains the Izvestia interlocutor.
In general, the expert estimates the current market conditions as difficult, including for car dealers, where a significant part of working capital is traditionally of credit nature.
- At the moment it is expensive to keep a large assortment of cars in stock. The costs are also included in the price of cars and contribute to the slowdown in sales," summarizes Filippov.
Multifactor phenomenon
Economist Lazar Badalov believes that the situation on the Russian automobile market is rather unique now. The new car market, he says, is currently made up mostly of either domestic or Chinese cars.
- There are both budget and more expensive options in this market. But this segment is not very familiar to the Russian consumer. But on the used car market, the brands that Russians are traditionally accustomed to buying are just represented," the expert explains.
As a result, citizens who want to continue buying cars of well-known brands turn to the secondary market. And buyers considering more budget options prefer new cars, the Izvestia interlocutor believes.
The gap in terms between loans for new and used cars, which has reached a historical maximum, reflects not only the peculiarities of the market, but also the underlying problems faced by all participants in auto lending - banks, dealers and borrowers, believes economist, director of the service "Merchant CRM" Anna Anisimova.
- The reasons for such a significant gap lie in the difference in approaches to risk assessment and subsidization. New cars are often supported by programs of automakers, which reduces interest rates and makes loans more affordable- explains the expert.
At the same time, when buying a used car, there are various crediting options, Badalov notes. In particular, not all intermediaries offer car loans, as a result of which the buyer takes a consumer loan, which is not taken into account in the statistics. It includes only car loans for cars with mileage sold in car dealerships. And these are, as a rule, not cheap variants of cars.
- And the more expensive the car, the longer the loan, because with the help of the term the buyer tries to make an acceptable monthly payment for himself. As a result, it turns out that the loan term for used cars is longer than for new ones, - emphasizes the economist.
Also, the increase in the term of car loans is associated with rising car prices and interest rates, adds Anisimova.
- The population's income does not keep up with these changes. Used cars, despite their apparent affordability, are becoming more burdensome due to high interest rates, which makes a long term the only acceptable option for many borrowers," points out the Izvestia interlocutor.
In general, the situation on the car loan market does not differ much from other segments of the credit market - regulation in this area has been tightened, Badalov believes.
- That is, the debt load of clients is monitored and taken into account by banks. Accordingly, it also makes any loans more expensive for the population," the expert believes.
And this trend, according to him, will continue if the rates continue to remain at such a high level.
The issue of adaptation
However, the current situation cannot continue indefinitely, warns Anna Anisimova. The gap in terms and cost of car loans will continue to grow for some time, but this process is limited by objective factors.
- The forthcoming introduction of macroprudential limits by the Bank of Russia will be an important aspect of deterrence. In addition, the dynamics will be influenced by the total cost of cars, the level of interest rates and the effectiveness of preferential programs, - lists Hodja Kava, a senior lecturer at the Department of Economic Theory of the Plekhanov Russian Economic University.
In general, the gap between the segments of new and used cars reflects the complex and contradictory picture of the car loan market, emphasizes Anisimova. Banks are forced to balance between the desire to maintain profitability and the need to take into account the solvency of borrowers.
- In the future, the market is likely to stabilize thanks to new regulatory measures, but the current situation points to the need for all participants to adapt to the changing conditions," sums up the Izvestia interlocutor.
