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Both the interest rate of the real estate loan and that of the lease consist of the constant and variable part, or Euribor. Since the Euribor rate remained negative for nearly seven years, a low interest rate and a constant monthly loan or lease amount was often taken for granted. However, inflation in the Eurozone reached record highs this year, prompting a rapid increase in the Euribor rate: currently the six-month Euribor has exceeded 1.8%, while the three-month rate is 1. ,2%.
At a time when the Euribor rate remained negative, the purchase of a 25,000 euro car with a five-year lease with a 10% down payment and an interest rate of 2.19% resulted in a monthly payment of around 390 euro. . Currently, depending on whether the customer has entered into a car leasing contract at the Euribor rate at three or six months, the monthly payment has increased by approximately 8 or 12 euros respectively. It should be noted that the exact increase in the rent depends on the part of the fixed rate applied to the customer and on the duration of the lease. At the same time, it is currently difficult to predict what the future Euribor rate hike might be, so it cannot be ruled out that the amount of leasing fees may continue to become more expensive, so we encourage customers to carefully plan their spending and expect a possible increase in rents “, explains the manager of” Luminor Lizings “Raivo Bāle.
As the expert predicts, following the principles of responsible lending and taking into account the fact that the risk of an increase in the interest rate and the customer’s ability to pay in such a situation are already assessed when making a leasing decision, most customers will successfully cope with the payout increase. Although the bank carefully monitors the principles of responsible lending, when purchasing a leased car, the customer must also evaluate their financial capacity and ability to meet obligations throughout the lease period.
Euribor is the European interbank market rate at which euro area banks are willing to lend euro funds to other banks and constitutes the floating part of the interest rate of the loan. The Euribor rate has been negative since 2015, but to reduce high inflation and stabilize prices, the ECB has started to raise lending rates. The rate reflects the situation in the financial markets and acts as a stabilizing factor for the market. Its amount is influenced by the decisions of the ECB and the rate is the same throughout the euro area.
