After several years Euribor the interest rate has crossed zero this year and, to combat rapid inflation, European Central Bank increased the rate faster than previously expected. This impacts not only home loans but also the leasing of cars, machinery and equipment. At the same time, the rapid increase in prices in the car market has slowed down, he says “Luminor Leasing“experts.
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“Once again this year the market continues to feel the effects of the long delivery times for new cars, the consequent increase in car prices, and now also the increase in the Euribor rate. Most lease agreements for the purchase of both cars and machinery and equipment are stipulated with a variable interest rate, which means that the monthly lease payments are also affected by changes in the Euribor and that the lessees they need to carefully evaluate their ability to repay the loan during the lease period,” says Raivo Bāle, head of Luminor Lizings.
For example, when the Euribor rate remained negative, if a customer bought a car worth €25,000 under a five-year lease with a 10% down payment and an interest rate of 2.14%, the monthly installment would reach €396 . With the increase in the Euribor rate, the monthly installment has now increased by around 17-22 euros, depending on whether the customer has signed a three- or six-month Euribor leasing contract. The exact increase in the leasing fee depends on the portion of the fixed interest rate charged to the respective customer and the term of the leasing contract.
Compared to last year, depending on the car model, prices have increased by 10 to 30%, in some cases even more. Long delivery times for new cars encourage active demand for used vehicles, so prices on the second-hand car market are even up to 30% higher than a year ago. Furthermore, due to the limited supply, some customers choose not to return the vehicles to the car dealerships at the end of the operating lease period, which has resulted in a significant decrease in the influx of cars into the secondary market, which has also contributed to the price increase.
“At the moment, there is no shortage of market challenges, linked to the economic situation and the slowdown in companies’ development and investment plans. Although the increase in car prices has decreased at the moment, as the costs of fuel, electricity, etc. increase, production costs are also increasing, so car prices may continue to rise in price. at the same time, the automotive industry expects improvements in delivery terms, which may also affect used car prices, however, it is still difficult to predict how quickly this could happen,” predicts Bāle.
According to information from the Financial Industry Association, about half of all new leases are taken for the purchase of passenger cars, a third for the purchase of equipment, including agricultural and construction machinery, and the rest for the purchase of commercial vehicles.
Data from “Luminor” show that the average amount of new car purchases for which customers buy vehicles for private individuals increased this year from 29,230 euros to 33,672 euros, while for entrepreneurs from 34,430 euros to 36,914 EUR.
“Luminor” leasing data shows that the most popular car models rented by customers this year are SUVs”Toyota RAV4″, “Nissan Quashqai” a “Dacha“, while entrepreneurs very often rent “Renault Master” or “Renault Trafic” vans and “Toyota RAV4” SUVs.
