Month: December 2018

Four out of ten Germans take out loans

Woman hides her face behind a moneybox

In the period from June 2015 to July 2016, four out of ten Germans took out a loan. Borrowing is particularly common for financing cars or motorcycles. 

Differences in the subject of installment credit are also evident between women and men. Overall, borrowers were satisfied and considered taking out further loans in the following months.

Advance credit by far the most common type of loan

This is the result of a survey conducted by opinion research institute execuresearch on behalf of the online credit comparison portal creditend. In total, around 40 percent of the survey among more than 1,000 German citizens stated that they had borrowed between June 2015 and July 2016. Of these, 23 per cent were in installment loans, followed by a credit line (12 per cent), a real estate loan (6 per cent) or mortgage lending (also 6 per cent). Of the almost a quarter of respondents who had taken out installment loans, 20 percent took advantage of the favorable hour, or the historically low interest rates, particularly intensively. In the period from June 2015 to July 2016, they even took out several loans.

Borrowing is mainly for vehicles

At 41 percent, most consumers used the installment loan to finance a new or used car or a motorcycle. In second place came home with 36 percent durable goods such as computers, TVs, washing machines or refrigerators. 16 percent used the taken installment loan for the area of ‚Äč‚Äčliving, thus for a renovation, a move or for the furniture purchase. Ten percent took advantage of the currently very low interest rates and owed with a new loan one or even several loans in progress, so as to lower their interest costs. A lower interest burden also benefited the nine percent, who borrowed an installment loan to make up for their bad debts. At four percent, borrowing was used to finance training or further education. However, the Germans are not tempted to unrestrained spending by the low interest rates, as the study also shows. To finance celebrations, such as a wedding, a borrowing in this country is not common. For this purpose, just as for a vacation trip, only one percent of the respondents used their credit. According to their own statements, only one percent of the respondents also used a installment loan for their trade, ie for the purchase of operating resources or for business expansion.

Men take more credit than women

Men take more credit than women

From the respondents’ answers, the study authors identified the typical installment borrower in Germany: on average, he is 48 years old, married and has an average net household income of 2,950 euros per month. Respondents who had paid installment credit between June 2015 and July 2016 were 53 percent male and 47 percent female. Not only do men borrow more frequently than women, they also opt for higher amounts: the average loan amount was 10,567 euros for male borrowers and 7,964 euros for female borrowers. Overall, the average loan amount was 9,330 euros, with an average maturity of 35 months.

Borrowers are satisfied

The study also shows that 80 percent of surveyed borrowers can imagine borrowing between August 2016 and August 2017. So you were apparently satisfied with the settlement of the loan and the terms. This is especially true of respondents who have taken out their loans on the Internet: Robert K. Hayes, CEO and co-founder of creditend, explains: “Among online borrowers, this share is even higher. The advantages, which from their point of view an on-line graduation, are above all transparent conditions and a fast, uncomplicated handling. “

 

Survey: Little interest in peer-to-peer loans

Nine out of ten Germans can not imagine using online portals to borrow from private individuals or even to lend a loan. Only two percent use such a platform at present, another four percent have tried it, but were not satisfied. Seven percent can at least imagine the use. Even with mobile payments, the Germans are currently still cautious. Only one in ten citizens currently uses such solutions. These are the results of the representative survey “Digital Financial Trends 2015” by us.

So-called peer-to-peer loans, in which private individuals grant each other loans, will not be that easy for the time being: 88 percent reject the use of online portals for credit transfer from private to private. Half of the Germans, on principle, do not lend money online or offline and do not accept personal loans themselves. Another 25 percent do not trust the intermediary portal operators. Eleven percent see the granting of loans as the sole task of a bank. “Peer-to-peer loans are still a niche business. The majority of Germans rely on the issue of installment loans to banks, “says our CEO John K. Ortiz.

Especially women refuse private money lending

Women are particularly skeptical about “private-to-private credit”: 53 percent would not borrow money, compared to 45 percent of men. The latter have borrowed more money from private individuals (7% compared to 5%) compared to women, and are more likely to imagine this for the future (8% compared to 4%).

Even mobile payment is still not widespread

Even mobile payment is still not widespread

– but is about to break through

Mobile payment is also not yet widespread: Only one in ten makes use of mobile payment solutions. With 35 percent, most security concerns cite their reluctance. 27 percent generally do not use their smartphone or mobile phone for money transactions, not even for online banking. Here, too, it is mainly women who are skeptical. A further 14 percent of Germans are afraid of spending too much money over fast and easy mobile payment options. When asked about the obstacles, multiple answers were possible.

But unlike private-to-home credit, mobile payments are in the midst of a turnaround, as 23 percent can imagine paying with their smartphones in the future. “Mobile payments will become established as consumers lose the fear of security breaches and learn how to handle them consciously. The providers could support this by investing in security and providing more information, “says our CEO Ortiz.

Germans are reluctant to talk about loans

Young woman holds her mouth shut, taboo topic

You do not talk about money – certainly not about what you borrowed. The Germans have always been seen as cramped when it comes to talking about money.

Lending is obviously a particularly big taboo subject. Not even one in two Germans openly talks about their debts at 45 percent. This is confirmed by a survey commissioned by the bank on the debt of the opinion and market research institute aliresearch .

Everyone does it, but nobody talks about it

The taking up of loans has long been normal in Germany as well: More than two-thirds of all Germans have already taken out a loan at least once in their lifetime. Above all, real estate and mortgage lending are widespread – 35 percent of Germans have already used this type of loan. This is hardly surprising – after all, most of them should not be able to afford the considerable costs of their own four walls completely. But the use of installment loans (30 percent) or the credit line (28 percent) is similarly widespread.

Especially in the minds of older Germans money and especially debts seem to be firmly anchored as a taboo topic. Not even 35 percent of respondents over 60 years talked about their debts – for almost two thirds in this age group, the topic is still an absolute no-go. The younger Germans are already taking a more relaxed approach to the subject of money: among the 30- to 39-year-olds, at least 61 percent do not mince words when it comes to debt. There is also a difference between the sexes. Men are more offensive with their liabilities than women, of whom only about 40 percent talk about their debts. For male debtors, it is almost 49 percent.

Shame as a reason for concealing debts

According to business psychologist Erich Kaiser, people are defined to a not inconsiderable degree by their wealth in our society. If you have money, you are considered capable of action. Therefore, it is not surprising that so many Germans prefer to keep quiet about their debts. The importance of money for social status can also be seen from the fact that people on low incomes are ashamed of their obligations. Every third person with a monthly household income of less than 1,000 euros expressed this. On the other hand, people who are financially sound are much less uncomfortable when they need credit for larger expenses. Obviously, their social status is so secure that only four percent of respondents with a net household income of more than $ 4,000 claim to be ashamed of their debts. Overall, 14 percent of Germans are uncomfortable with their debts.

Despite favorable loans Fear of a debt spiral

Despite favorable loans Fear of a debt spiral

Apart from shame, the fear of falling into an insurmountable debt trap is also deeply rooted in the German soul. Overall, 42 percent of Germans fear that they will not be able to get rid of their debts. This fear is especially pronounced at around 57 percent for households with a monthly income of less than € 1,000 and in the age group of 30- to 39-year-olds with 55 percent. Respondents between the ages of 50 and 59 were least likely to get into a debt spiral through loans. But even here it was still just under a third that expressed this fear.

Consumers are well aware that, given the continuing low interest rates, loans are currently available at historically favorable terms. A quarter of respondents said they borrowed because of low interest rates. Another 37 percent could envisage borrowing for this reason, and 16 percent would increase their credit due to low interest rates. The fear of the debt trap seems to be in many cases only a theoretical one. Because only a good quarter of the respondents stated that they did not want to borrow in principle.

Smart home with a loan finance

Woman holding a smartphone with a smart home application in her hand - CreditPlus Credit Magazine

Control the light via smartphone and be reminded by the fridge to the purchase – the topic of smart home is becoming increasingly interesting for the German citizens. 

As a representative survey commissioned by our shows, for many, a loan is also conceivable to finance the smart facility. Smart Home devices are increasingly finding their way onto the mass market.

Credit for the Smart Home: Wi-Fi doorbell is particularly popular

Credit for the Smart Home: Wi-Fi doorbell is particularly popular

39 percent of respondents would borrow for smart home devices. At 15 percent, the largest share is interested in a Wi-Fi doorbell, which shows who is at the door by video transmission directly on the smartphone. But even an intelligent refrigerator, which checks the shelf life of food and possibly reordered, is on the wish list for 13 percent of respondents. Just as many Germans would take out a loan to afford a sound system integrated into the living room wall. An interactive cooktop with integrated recipe database, which is networked with the refrigerator and thus checks the availability of the ingredients – that’s what ten percent of Germans would like. Also popular is an alarm clock that simulates the sunrise, bed pads that analyze sleep, and a sofa with touch sensor that adjusts the seat as needed. Even for a connected with the fitness bracelet Bluetooth balance, an on-the-go oven or a sofa that turns on indirect motion by motion sensor, still seven percent would take a loan.

Smartphones as a pioneer for smart home devices

Smartphones as a pioneer for smart home devices

Overall, the buying mood of the Germans is good when it comes to furniture: 95 percent of respondents plan within the next year, money for new purchases in this area – 31 percent even want to spend 1,000 euros or more. Here, purchases in the smart home sector seem to be gaining in importance. John K. Ortiz, Chief Executive Officer of our bank, sees smart home devices on the threshold of the mass market. In his view, the widespread use of smartphones is an important prerequisite. “On the one hand, they serve as a mobile and familiar control device in which all functions converge centrally,” comments Ortiz. “And they’ve made consumers accustomed to networked, versatile digital solutions in their everyday lives and appreciate the benefits.”

Student loan less popular with students

The students in Germany are considering whether to take out a student loan and how high it should be. 

This is the finding of a recent survey by the Center for Higher Education Development.

Significantly fewer student loans than three years ago

For its Student Loan Test 2017, the CHE carried out a survey and determined that in 2016 around 44,000 student loans were taken. In 2014, there were still 60,000 – a decrease of one quarter. Robert E. Vasquez, Head of Policy Analysis at CHE, has a guess as to why this could be: “Greater time to finance the study again by a side job, could be reasons for the decline in student loans – in the sense of ‘waiters instead of credit’. According to Vasquez, the average volume of borrowed funds shows that students make judicious calculations when deciding on a loan.

Credit for students: Beware of dubious offers

Credit for students: Beware of dubious offers

In addition to classic student loans, other offers such as crowdfunding or peer-to-peer loans are explicitly aimed at students. The lending is not done through a bank, but through an online portal that conveys loans from private individuals. Such offers were not taken into account in the CHE test and Vasquez also warns against them: “Under the label ‘Student Loan’ loans are granted here at sometimes horrendous interest rates of more than ten percent, which has nothing to do with the needs of a student,” explains he. Vasquez also gives tips on what students should look for in a loan: The low-interest phase provides favorable conditions for loans. This also applies to the offers of regular credit institutions, not just special development banks. At the conclusion of the contract, students should ensure that interest rates remain stable throughout the life of the loan. For a reputable provider, the repayment modalities are clear from the beginning, according to Vasquez.

 

More car financing via loans

More and more consumers are opting for car finance through loans. In the first half of 2016 was a rise in car loans recorded, as the Banking Association announced. 

The fact that buying a car is currently financed by a loan is also due to the particularly low interest rates.

Number of car financing increased

In the first half of 2016, the commercial banks granted vehicle financing for 894,000 vehicles. This represents an increase of 4.6 percent compared to the first half of 2015. The increased interest in loans for car purchases is also contributing to an increase in new lending business in general: the total volume of new lending to businesses and consumers in the first half of 2016 was one Value of 73.9 billion euros, 12.6 percent higher than in the same period last year.

Even used cars are financed through loans

Even used cars are financed through loans

It is noticeable that many used vehicle purchases are also financed by credit: The vehicle financing of new cars rose by 4.1 percent in the first half of 2016, and of used cars by as much as 5 percent. Nationwide, the registered ownership of used cars in the first six months of the year with 3.7 million more than twice as high as the registrations of new cars: Here, the number in the first half of the year to 1.7 million.

Low interest rates create good conditions for buying a car

Currently, consumers can look forward to the low interest rates on favorable lending rates. Steven J. Barnes, Managing Director of the Banking Federation, also said: “Consumers’ employment prospects continue to be good and payment practices remain high.” According to the association, around 98 percent of all consumer credit is properly repaid. The Consumer Credit Index, which the Duresearch Institute (DI) calculates twice a year, suggests that the use of personal loans – such as vehicle finance – will remain at a high level in the coming twelve months.

Duration of processing loan applications

It only takes a few minutes to complete the application for a loan. But how long does it take to process through the bank? 

The duration of processing credit applications varies greatly. While private customers usually receive a quick response, companies often wait unnecessarily long for a loan commitment, as a recent investigation shows. The type of financing is also crucial.

Consumption of consumer loans much faster than corporate loans

A total of 36 German credit institutions have asked the auditing firm how long they need to process a loan application. While loan approval for consumer credit is now often possible within a few hours, companies sometimes wait weeks for the bank’s response – the longer the higher the turnover of the business.

Trend towards so-called “instant loans”

Creditworthy individuals with short-term financing needs benefit from the development at ever shorter processing times. Only six percent of banks surveyed still need more than five hours to process a loan application privately, with three quarters of institutions claiming to do so in less than 15 minutes. For pure processing time but still lying and transport times. Therefore, a so-called instant loan is not necessarily available immediately. Our bank is already a step ahead with its online signature credit . The loan amount is available immediately.

Longer waiting times for mortgage lending

SMEs with a turnover of less than 2.5 million euros, on the other hand, are waiting much longer for a loan. Here is an overview of how long it takes to process a loan application:

  • Two days or less: Only 17 percent of all banks manage this.
  • Two to five days: 44 percent of the banks take up to one working week.
  • More than five days: 39 percent of all banks are comfortable in processing.

Private customers, however, also have to expect longer waiting periods when they apply for mortgage lending. Compared to the predecessor study, the processing time in this area has even extended and in many cases is still several days. The background to this is that banks have to comply with much stricter requirements when examining the new home loan book directive.