Most recently, a month ago, at the end of February, we discussed the fact that sales statistics in Germany have set an extremely negative record. Although 2009 still seemed to be okay as car sales were doing well because of the wreck premium, by the end of the year it turned out that only the wreck premium was doing so well. When the German government withdrew, for reasons of savings, the aid it gave to those who had given away their old cars and bought new ones, it turned out that the wreck premium did not boost the car market, but only kept it alive for a while before going dead. Perhaps following the example of the Germans, the French and Italians, who are nowhere near as good as one of the world’s strongest economies, have not let go of car companies and still have a wreckage premium in early 2010. They give you € 1,000 and € 5,000 off the price of cars, which is a huge amount, as it could be up to a quarter of the price of a mid-range, quality car.
Coming back to us and our narrower environment: In Romania, car sales have fallen by more than 60%. Before we look at this figure with astonishment, we turn to some thoughtless, slightly chauvinistic statement: in Hungary, car sales fell by 58% compared to the pre-crisis spring, 2008.
The credit market has changed significantly
The number of loans fell by 90%, which is unprecedented in all segments of the Hungarian credit market. Of course, the banks had to move on whether this would be a success or not. In any case, it may be interesting to see what measures financial institutions and the HFSA saw as the pledge of a bright future.
First of all, the franc-based good loans were ruled out, as this requires 60% self-sufficiency, which virtually no one has, and yes, it will probably collect a little more and buy the car on its feet. Euro and forint-based car loans remained. The latter always have a lower interest rate but a much higher level of own funds (40% versus 25%). Individuals can only have a maturity of seven years.
Non-retail customers have slightly better access to car loans
The term is eight years for companies and businesses and the equity is only 35% and 20%, respectively. The reason for this is simple: non-natural persons can only lease and the leasing structure is always more favorable than even the most favorable car loan. The reason for this is that in the case of leasing, banks and other institutions own cars, trucks, etc. they sell – so to speak – so they are braver when it comes to defining conditions.
By the way, this spring the technical details remain roughly the same as they were this year: the oldest car can be 12 years old, no older than 15 years at the end of its life, and the smallest amount is $ 100. The list of papers requested for a car loan has also been retained: basic documents for individuals, balance sheets for companies, extracts from the general ledger, and ordinary papers from the borrower.
Whether or not these measures, the changes, will have a positive impact is the music of the future. Banks and the HFSA expect that at least the worst customers can be screened with these conditions, and the credit market will be cleared: anyone who is not sufficiently capitalized will not receive a loan or leasing. The concern is understandable, as the current economic crisis has begun, with US banks already giving car loans to the worst customers, whose financial situation has danced to the brim, and then, with sincere regret to the world, has gone wrong.