Consumer Credit in Chile

PROSPECTS

Chilean consumers’ financial habits have improved

According to the 2017 Household Financial Survey performed by the Central Bank, there are fewer households with debt due to a change in consumer habits. Chilean consumers now prefer to save money and become informed before opting for a loan.

The purchase of a home is an investment intended for retirement

Many Chileans cannot live economically comfortably after their retirement and look for options during their productive life that can bear fruit in this stage. In this sense, the real estate market is emerging as an interesting investment mechanism, with surplus value, fairly assured profitability and minimal risks given Chile’s stable economic record.

Strong demand in auto lending

Chile achieved record car sales during 2018 and according to the National Automotive Association of Chile (ANAC) 80% of the purchases are made through lending. Air pollution in cities such as Santiago has prompted the enactment of laws that have a direct impact on automobiles.

COMPETITIVE LANDSCAPE

Websites centralise the lending offer

In order to make financial services transparent to consumers, all the entities that grant loans must inform CAE clients. CAE is an indicator that includes all the expenses associated with the purchase of a product such as the interest rate, operational expenses, insurance and the total amount that a consumer must pay when finalising the payment.

Lower-income consumers look for other lending options

Due to stricter regulations in the banking system, non-banking entities such as cooperatives, union funds and retailers allow for the population segment that fails to meet bank standards by having a low salary to have a chance to obtain loans in exchange for paying a higher interest rate. People within the lower-income segment find in loans a way to cover basic living expenses such as food or unexpected events such as medical bills, which usually total large amounts of money.

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