The impact of the COVID-19 pandemic and consequent economic downturn has limited demand for consumer credit. Driven by the very challenging economic context, demand for consumer credit has suffered from a significant drop in consumer confidence and willingness to purchase expensive items with credit.
The contraction of consumption continues to impact many industries in Argentina, including motor trade, with car sales continuing to fall. Auto loans are naturally being negatively affected by falling car sales, with higher interest rates on loans further discouraging purchases.
In recent years, there has been a significant digital transformation in the financial industry due to the emergence of fintech companies, which have contributed to a new way of thinking, competing and operating in the financial world. These players compete directly with traditional companies within the industry, such as banks.
In Argentina, the development of consumer credit in 2021 and beyond will depend heavily on the rate of economic recovery. Despite the severity of the recession, strong government support in response to the economic fallout of the pandemic will help to safeguard jobs and boost demand.
Due to high interest rates, it is becoming more expensive to finance credit cards for Argentinian consumers, thus making it more convenient to request a personal loan to pay the total amount owed on the credit card instead of trying to finance the payments. The interest rate to finance a credit card in the current economic environment can be more than 100% of the original amount per year.
Mercado Libre, which originated in Argentina and is now one of the most highly valued Latin American unicorn companies, recently launched Mercado Crédito. This platform offers working capital loans to small and medium-sized enterprises that use its Mercado Libre marketplace or Mercado Pago payment platform.
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Understand the latest market trends and future growth opportunities for the Consumer Credit industry in Argentina with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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This report originates from Passport, our Consumer Credit research and analysis database.
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