If the MoneyPermit Bank’s new proposals for limiting foreign currency loans come into effect, there will be a significant reduction in potential borrowers, meaning that they will be able to borrow much less whether it is a car title loan or any other unsecured or real estate loan. Professional organizations take a stand, but politicians say the final word.
According to various professional organizations, limiting borrowing would greatly reduce the number of people who can obtain credit. Those who would be paid out would only receive smaller amounts, so they would not provide a solution for buying a car, and especially not for buying a property. However, it is also true that the population is over-indebted – but the launch of lending could boost economic growth. Against this background, the introduction of restrictions would probably serve to deepen the recession.
The situation is no better with car title loans
The Leasing Association is of the opinion that such interference with market processes is unacceptable and that it is economically unjustifiable to restrict competition in this way.
For car loans, the HFSA Recommendation, which sets a minimum deductible of at least 20% and maximizes maturity for 8 years, came into effect on January 1, 2009. It is already apparent that this regulation has cleaned the portfolio of leasing companies. Since the entry into force of the HFSA recommendation, there is much less car loan default.
Because of the protracted financial crisis, people think a thousand times before borrowing, according to statistics, the proportion of cash buyers has increased. Nowadays, people who buy a loan with zero percent own funds do not buy a vehicle.
An average car loan used to be HUF 2 to 2.5 million before
While the average maturity was 5-6 years. Taking into account the monthly installment limit to be introduced, for a demanding foreign currency loan with an average payment (note that the vast majority of car loans are foreign currency-based), you can pay just over $ 20,000 in monthly installments. See Car Loan Calculator. This means a loan of 8-900 thousand forints with a maturity of five years. You can’t buy a new car from this, you can barely use a used car. Looking at the minimum wage announced, the situation is even worse, as they can only take out a $ 10,000 monthly loan, which is just a few hundred thousand for a five-year term, which excludes them from buying a new or too old vehicle.