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People are increasingly relying on loans to fix their cars. And because of rising prices for services, they’re taking out bigger loans if their car breaks down. This is demonstrated by the latest survey by BNP Paribas Personal Finance in Bulgaria.
During May-October 2022, the average amount of loan applications for auto repair increased by 29.3% to BGN 5,276.
According to the bank’s experts, people often use these loans to install gas appliances in order to reduce fuel costs.
Loans for the purchase of furniture are in second place for growth in the amount needed. With them, the average amount reached BGN 7,514, which is 29% more than in the period May-October 2021. In third position are loans for the purchase of used cars, where the growth of the average amount applied for is 25.3% to BGN 11,470, also due to rising car prices.
Most often, we take out a consumer loan for home repairs. This is 33.9% of all loan applications submitted to BNP Paribas Personal Finance in Bulgaria. Here too, due to the increase in prices, the amount people withdraw to implement their plans also increases. The average amount of reparation claims reached BGN 11,289 and a year earlier it was BGN 9,026. According to experts, this growth is due to two main reasons. The first is the rising prices of building materials and labour. Therefore, people who have home renovations planned implemented them in the summer of 2022, rather than postponing them due to concerns that the project was more expensive.
The second reason is related to the increase in electricity and thermal energy prices. To reduce the cost of household bills, many Bulgarians have financed the replacement of windows, the installation of external and internal insulation of the house, the replacement of water and electricity systems with consumer loans.
In second place are loans for debt consolidation with a share of 30.7%. There is an increase in applications for these loans: a year earlier their share was 27.6%. In third place is financing for the purchase of a used car with a share of 13.6%. Here there is a drop compared to the period May-October 2021, when the share was 16.1%. The average amount of applications exceeded BGN 10,000 for the first time.
In the last 12 months there has been a significant growth of 22.6% in the average amount of consumer credit applications. Therefore, it reached BGN 10,833, while a year earlier it was BGN 8,835.
With the highest average project amount in the top 10 are debt consolidation loans – BGN 12,892. In May-October 2021, it was 10,890 levs, which is 18.4% lower than the current level.
The trend in the demand for loans for used cars is also interesting. In this segment, a 25.3% growth was observed in the average number of applications, which reached 11,470 levs. Due to the limited supply of used cars and the increase in their prices, many Bulgarians have revised their plans to change their car.
Young people aged 40-49 apply for the largest amount of loans – an average of BGN 12,967, in second place are young people aged 50-59, who applied for an average of BGN 12,814 – young under 20 require the lowest amounts – 4,324 BGN. After them are 20-29 year olds with BGN 7,965.
The average monthly expenditure reported by users is BGN 1,345, which includes the main permanent items of the budget: bills, food, transport and more.
Only 10% live on rent and the average reported rent is BGN 605. 41% of consumers live in their own home without paying rent, but without even owning it. Often these are still unmarried people with up to 5 years of work experience who seek sums up to BGN 10,000 for personal purposes, hobbies or repairs.
