Banks have reduced the share of approved car loans in Russia

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Banks have reduced the share of approved car loans in Russia

Russian banks in June approved 36.9% of applications received for car loans, TIme reports with reference to statistics from the National Bureau of Credit Histories (NBCH). Earlier, the figure was approximately at the same level in April and May last year – at the height of the anti-coronavirus restrictions.

Over the past month, the level of approval of applications for auto loans decreased by 2.3 percentage points. The dynamics of satisfied applications for these types of loans was last positive in April, experts said. Then the share of those amounted to 42%, and in May fell to 39.2%.

This situation is due to the focus of banks on lending to citizens with a good history, explained Alexei Volkov, marketing director of the NBKI. “Previously, banks had a priority on the formation of a client base, now – on the quality of the portfolio,” he said.

The managing director of the NKR rating agency Mikhail Doronkin also expressed the opinion that the fall in the level of approvals may be associated with an increase in demand for auto loans against the backdrop of accelerating inflation and the expected growth in loan rates. “This could lead to an increase in requests for loans from borrowers with a higher debt burden, who were probably denied a loan,” the expert said.

Another reason for the observed dynamics is the fact that the shortage of cars on the market provoked an increase not only in prices for them, but also in the commission that dealers charge banks for obtaining a loan, said Kirill Grigoriev, head of the auto lending department at Tinkoff Bank. At the same time, Ruslan Korshunov, Senior Director for Banking Ratings at Expert RA, linked the decline in the share of approved auto loans with the desire of banks to play it safe due to the aggravation of the situation with the pandemic.

Earlier today, Kommersant, citing sources, said that the Ministry of Industry and Trade of Russia decided not to restart the preferential car loan program, which compensates for 10% of the advance payment for a car worth up to 1.5 million rubles. This is due to the “overheating” of the market due to the rush demand for cars.

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