Do the Germans pay off their loan installments even in the crisis?

Published on 26 Nov 2020

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Not only the health system, but also the economy is facing major challenges as a result of the Corona crisis. Due to the closings and contact restrictions, many have to cope with financial losses and fear for their jobs. Does this mean that there is not enough money to repay current loans? How is the payment behavior of Germans developing during the crisis?

Majority of the loans properly repaid

A current one carried out by SCHUFA study shows that bills and loan installments are paid on time, even in times of crisis. The first lockdown in the spring did nothing to change that. At the end of September this year, the loan default rate was 2.1 percent, as in previous years. That means: over 97 percent of consumer loans are repaid on time and in full. This could be related to the fact that more and more loan conditions are being compared from different providers. Borrowing takes place only after careful consideration.

Declining number of loans with increasing loan amount

There are currently around 17.6 million current installment loans in Germany that are often used to finance larger consumer spending. Although the number of newly concluded installment loans has decreased in recent years regardless of the corona pandemic, the loan amount has increased. It currently averages 12,710 euros. This spring and summer, loan demand was lower than in 2019, which is likely to be related to the time of year, but also to the first lockdown. To cushion financial problems, most people postponed major purchases, overdrawn their accounts, or sought government aid instead of taking out a loan. This development was reversed in September, however, so that more personal loans were taken out in that month than in September of the previous year. For 40 percent of those surveyed, the topic of finance was more important than usual this year.

Further development of the corona pandemic is now crucial

Even the self-employed and small businesses have been paying back their loans in an exemplary manner. State aid has largely prevented bankruptcies. But experts expect a postponed wave of insolvencies next year. Whether the loan default rate will remain so low depends on the further development of the corona crisis. The study covers the first three quarters of this year, which is why the second lockdown and its effects are not included. Nevertheless, the majority of Germans have so far been convincing due to their exemplary willingness to pay.