less big purchases
Shufa: Consumers are again borrowing for more installments
According to a study, people in Germany have taken out more installment loans for the first time in four years.
Inflation bothers people. Large investments are postponed. On the other hand, the demand for microcredit is increasing.
Wiesbaden. According to a study, despite financial worries in times of rising inflation, people in Germany have taken out more installment loans for the first time in four years. In 2021, small amounts of money were in demand, especially among young people.
Larger purchases, on the other hand, were postponed, according to Shufa’s Risk & Credit Compass. He also proved to be a responsible borrower: he reliably paid off his installment loan in the second year of Corona.
Most loans are repaid on time
As in the two previous years, 97.9 percent of all installment loans taken out were serviced as agreed. According to the study published on Tuesday, there were no negative effects of the pandemic on the indebtedness and over-indebtedness of people in Germany in 2021 either.
Last year, Shufa counted around 6.9 million new installment loans. That was around 4.5 percent more than in 2020. The demand for loans under 1000 euros grew particularly strongly. Their share of all new contracts has risen from 19.9 percent in 2020 to 29.5 percent now. In contrast, the shares of medium (from 1000 to 10,000 euros) and large installment loans (from 10,000 euros) fell.
Have to wait for big purchases
“The Germans are pushing for big purchases. This also reflects the mood in our consumer surveys, which we conduct regularly,” explains Schoufa board member Ole Schröder. In a survey in May, 57 percent said they postponed major investments.
Energy prices were already driving up consumer prices last year. Inflation averaged 3.1 percent for the year. A further increase in energy prices as a result of the Ukraine war will boost growth this year.
Buy now, pay later
According to the information, the low loan amount was particularly popular with young people last year. The average amount of new loans under 1000 euros was around 409 euros across all age groups and 343 euros for 18 to 19 year olds. “The high proportion of low loan amounts, especially among younger, internet-savvy target groups, is due to so-called buy-it-now-buy-later offers, which are increasingly in demand,” explained Schröder.
This is purchase at the pump through online payment services. According to the financial supervisory authority BaFin, consumers can postpone the payment target for some payment services to a later date or convert the outstanding invoice amount into installment payments. As with other payment services, open invoices that a customer has with a retailer are added up over a certain period of time and only become due later.
Criticism of buying on credit
“These supposedly viable payment solutions can quickly become a debt trap for young people,” warns Schröder. Baffin recently warned that it’s easy to lose track.
Consumer advocates criticize that with this type of financing there is often no credit check and the information provided before the end of the lecture is sometimes insufficient. This made it difficult for consumers to assess what they were paying for themselves.
The data collected and analyzed by Shufa and other credit reporting agencies is vital for millions of people when it comes to obtaining a loan or arranging a rental agreement. Credit compass does not include mortgage loans and leases.
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