Returning a loan to buy the car, the living room furniture, the washing machine or any other item costs almost twice as much in the Girona municipality of La Jonquera than in the nearby town of Le Perthus, the closest town, but already in French territory. In January, the average interest rate applied to loans of between one and five years dedicated to the acquisition of goods and services for consumption or granted by financial entities through their bank cards or directly in stores reached Spain 7.01%. This percentage is 2.3 points above the euro zone average (4.73%), and is 4.3 points and 2.4 points higher than the average interest rates in Belgium and France (2.78 % and 3.65%, respectively).
Despite being practically at the same level as in December and being almost one point lower compared to January 2020 (7.99%), the Spanish leads the average interest rates of the countries in its immediate environment , in which, beyond the already mentioned Belgium and France, Portugal (6.58%), Italy (6.01%) and Germany (4.46%) also appear. With data from the European Central Bank (ECB), “in the euro zone, only Greece, Slovakia and the three Baltic countries exceed Spain in the cost of lending money,” says the finance expert at the banking comparator iAhorro, Antonio Gallardo.
How are these disparities explained? For the director of the Master’s Degree in Financial Risks at ICADE Business School, Luis Garvía, the key is how likely it is that, in each country, users will not be able to extinguish their debts with the bank and stop paying their fees. In Spain, the delinquency rate —that is, the percentage of unpaid loans in relation to the total granted by banks— rose three hundredths in January compared to December, to 4.54%, its first rise since August. In this context, “it is logical that the interests of consumer loans are above those of other European countries in which the delinquency rate is less high, such as in France, where it is about two percentage points below the Spanish rate. ”, Garvía points out.
Although it is somewhat lower than the level registered in January of a year ago (4.83%) and is very far from the historical maximum to which it was seen rising in December 2013 (13.61%), experts believe that the rate delinquency in Spain is destined to grow more as soon as the effect of the credit moratoria disappears and of the different aid put in place to alleviate the effect of the coronavirus crisis. Even so, for the time being, the cost of consumer loans in Spain is following a moderately downward trend that began a couple of years ago, in line with the rest of the euro zone.
Decrease in supply and demand
If the look were directed to the credits for a term of more than five years, hardly differences would be noticed with respect to those of shorter duration. In this category of loans, the average Spanish interest rate stands at 6.97%, that is, 1.2 percentage points above the euro zone average, and only behind Portugal (7.61%). ). They are followed by Italy (6.89%), Germany (6.24%), Belgium (4.68%) and France (3.37%).
These data are accompanied by a tightening of the criteria for granting credit in the last quarter of last year, which the Bank of Spain, in its latest report, defines as “moderate”. “This evolution of the offer would be explained fundamentally by the increase in perceived risks, linked to the deterioration of the general economic outlook, and by the lower perceived solvency of borrowers,” according to the supervisor. On the demand side, this “reduced slightly during the last three months of 2020”, mainly due to “a decrease in consumer confidence and a reduction in spending on durable consumer goods”.
Other elements that can influence the final cost of these loans are “the client’s risk profile or the fact that there are more financial agents in the market, so banks carry out fewer operations, but with higher commissions,” explains Garvía. . To understand why personal loans are more expensive than other types of credit, the fact that the user does not put anything as collateral that the bank can claim in case of default, “such as a home in a mortgage”, he concludes.