How much does it cost to get a loan for the 6 million Argentines who do not want to go into debt with a bank



Home »Economy» How much does it cost to get a loan for the 6 million Argentines who do not want to go into debt with a bank January 2, 2022 Non-bank credit cards, cooperatives and mutuals, fintech companies, sales companies household appliances and leasing companies are sources of financing in pesos for those who do not want or do not have access to bank credit (Adrián Escandar)

In addition to the traditional option of banks, the financial system offers other alternatives for obtaining a loan. Appear non-bank credit cards, co-ops and mutuals, fintech companies, appliance sales companies and rental, among other options for those who prefer not to borrow from a bank or, perhaps, are not able to do so.

According to a Central Bank report with data from June 2021, 6.6 million Argentines have received funding of this type. The study recorded 7.3 million in the same month of 2019 and 6.2 million in 2020, with which the fall of the pandemic began to show an upturn. Of these 6.6 million debtors, There are 3.2 that do not record bank debts, so it is understood that non-bank credit is the only way to access the financing they have..

The financial system offers other alternatives for obtaining a loan for those who prefer not to borrow from a bank or, perhaps, cannot do so

The report allows us to extract more information on how this segment of the population is doing when it comes to borrowing:

Loans granted by “Other Non-Financial Credit Providers” (Opnfc), the name under which the BCRA brings together the 264 non-banking entities mentioned above, reached $ 313,000 million, representing 17% growth over 2020. Excluding credit cards, the total amount in this segment reached $ 144,000 million. By comparison, the stock of personal bank loans on the same date was $ 524,000 million and that of bank cards was $ 997,000 million.

– Within the stock of $ 313,000 million granted by these entities, non-bank credit card issuers took the largest share, $ 182 billion. The other funds were granted by Cooperatives and mutuals ($ 24,000 million), FinTech ($ 21,000 million), Sale of household appliances ($ 37,000 million) and Rental and factoring ($ 6,000 million). Other financial officers invested the remaining $ 40,000 million.

The weighted average rate paid by debtors was 93% per year, 7 percentage points above 2020. The cost of credit varies according to the type of provider, with averages of 72% per year for cooperatives and mutuals, 44% per year for leasing and factoring, 132% per year for fintechs, 91% per year for non-bank cards and 97% per year for household appliance sales companies. The rates are higher than those of banks since they are applied to riskier customers: those who take out these loans, in general, have little or no chance of obtaining a bank loan..

– The high risk levels are reflected in the irregularity of this credit segment. Non-bank loan delinquencies represented 26% of the total portfolio in June 2021. This high figure shows an improvement, however: a year earlier, at the height of the forties, it reached 41%. The successive rules for refinancing payments have reduced the irregularity.

Compliance with quotas is closely linked to the performance of the economy. “Periods of persistent decline in economic activity tend to be linked to a sustained increase in the percentage of the portfolio in an irregular situation,” the BCRA report emphasizes. In comparison, at the same time, the irregularity of personal loans of banks was 5%, while the delinquency of total loans to the private sector was 4.1%.

At the height of the quarantine and restrictions, non-bank credit delinquencies reached 41%; a year later it fell to 26% of the total portfolio

– Within the stock of $ 313,000 million granted by these entities, non-bank credit card issuers took the largest share, $ 182 billion. The other funds were granted by Cooperatives and Mutuals ($ 24,000 million), Fintech ($ 21,000 million), Sale of household appliances ($ 37,000 million) and Leasing and Factoring (6 000 million dollars). Other financial officers invested the remaining $ 40,000 million.

– The non-bank credit providers which have recorded the strongest growth are fintech, “in connection with the consolidation of new technological models of credit supply”, and non-bank card issuers, which also integrate other types of credit products. At the other extreme, appliance sales companies have been the supplier that has lost market share. The rest of the vendors “showed greater stability throughout the period,” the BCRA said.

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