Over the course of 2020, various actions were taken by the government and individual banks in response to the COVID-19 pandemic with the aim of lessening the financial strain being experienced by many households. Among the main factors placing strain on personal finances during the year were lockdown quarantines which made it difficult or impossible for many people to continue with their normal professional and business activities.
2020 saw auto lending record one of the lowest growth rates in consumer credit in outstanding balance terms while registering among the strongest growth rates in gross lending terms. This is an indication that far fewer Chileans are prepared to borrow money to finance a car or motorcycle, while many existing borrowers are struggling to meet their repayment obligations.
One of the measures taken by the government of Chile in response to the COVID-19 pandemic that had a particularly strong impact on the country’s consumer credit market during 2020 was the approval of a scheme that allows people to withdraw up to 10% of their pension fund savings during the COVID-19 crisis. This has meant that many people were encouraged to take care of their subsisting debts and reduce their financial burdens, with many others having assigned the money that they saved as the deposit required to finance the purchase of real estate via mortgages/housing lending.
Durables lending and home lending are slated for some of the best performances in consumer credit over the forecast period and the principles of home seclusion that came to the fore during the COVID-19 pandemic during 2020 bear some responsibility for this situation. One of the main factors motivating consumers to invest in consumer durables and home improvement projects is that most people spent a lot more time at home during 2020 than they otherwise would have.
Outstanding balance is likely to experience strong growth in most consumer credit categories over the forecast period as significant numbers of borrowers are expected to continue struggling to meet their repayment obligations in the wake of the COVID-19 crisis. This not only entails an increase in the prevalence of delinquent debt but also an increase in refinancing activity.
The forecast period is expected to see many Chileans remain prepared to take on some types of debt, with consumer credit expected to benefit from the liberal attitude towards personal borrowing that prevails in the country. Facilitating this situation is likely to be the ease with which consumer credit can be accessed and processed directly on the internet, with the strong development of fintech in the country towards the end of the review period likely to continue being seen during the forecast period.
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Understand the latest market trends and future growth opportunities for the Consumer Credit industry in Chile 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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