The rise in interest rates also affects the car leasing market

After several years”Euribor” The interest rate has crossed zero this year, and to counter rapid inflation, the European Central Bank has raised the rate faster than previously expected. This has an impact not only on home loans, but also on the leasing of cars, machinery and equipment, while the rapid increase in prices in the automotive market has declined.

“This year the market continues to suffer from the long delivery times of new cars, the consequent increase in car prices and now also the increase in the Euribor rate. Most leasing agreements for the purchase of both cars and machinery and equipment are stipulated with a variable interest rate, which means that the monthly leasing installments are also affected by changes in the Euribor and that the lessees must evaluate pay more attention to their ability to repay the loan during the lease period,” says Raivo Bāle, “Luminor rental manager.

For example, at a time when the Euribor rate remained negative, if a customer bought a car worth 25,000 euros under a five-year lease with a 10% down payment and a rate of 2.14%, the monthly payment reached 396 euros. Parallel to the increase in the “Euribor” rate, the monthly installment has now increased by around 17-22 euros, depending on whether the customer has stipulated a leasing contract at the quarterly or six-monthly “Euribor” rate. 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.

The price increase has decreased

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.

Popular SUVs and vans

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 purchase price of new cars, for which customers buy vehicles for individuals, this year has increased from 29,230 to 33,672 euros, while for entrepreneurs, from 34,430 euros to 36,914 euros.

This year, the most popular car models rented by Luminor customers are Toyota RAV4, Nissan Qashqai and Dacia SUVs, while business people rent Renault Master or Renault Trafic vans and Toyota RAV4 SUVs more often.”