Where do auto loans drive?

Tighter car loan seriously hamper the further development of the market.

As you know, earlier this year the Central Bank of Azerbaijan has advised banks to limit car loans. Instead, the banks for a while completely stopped car loans. After its renewal were substantially tightened credit conditions. In particular, the initial fee for cars older than one year amounted to 80 % of its value. Previously, the minimum initial payment requirements were at the level of 15-20%, now they have increased to 40-45 %. At the end of last year in Azerbaijan auto loans was active in 31 of the 43 banks. Average lending rate was 19%.

Termination of car loans, according to the chairman of the Center for Economic and Social Development Vugar Bayramly has objective reasons . In 2013, the volume of overdue loans reached 800 million manat, increasing by 6%. Whereas the growth of delinquencies on auto loans in the total was 15% , which could not escape the attention of the Central Bank.

Bayramly told Turan that due to the tightening of lending conditions car for this year , its volume can be reduced by 20%. Because the majority of new and expensive cars on credit were implemented suffer and import of cars. As a result, in 2014 the volume of imported cars in comparison with the previous year may fall by 15%. Unattractive car loans reduce the demand for new cars , and which will result in a general decrease in prices.

In the secondary market will develop the opposite pattern. The applied ecological standard Euro 4 limits the import of old cars in Azerbaijan . Tightening of car loans stimulates demand for old cars . This will eventually trigger a rise in prices , especially on cars until 2005, so imported into the country. A side effect of the recession car loans will also be lowering the volume of voluntary insurance. Because 80% of this type of insurance had credited on cars , said the expert. -15B-