Consumer Credit in Chile

PROSPECTS

Card lending boosted by concerns over taking on long term debt

Card lending continues to dominate consumer credit gross lending in Chile. Due to the vast supply of credit cards by retail banking and cooperatives, complemented by store card activity, this type of lending has become highly popular among consumers as it offers an easy way of purchasing short-term necessities.

Chileans purchasing property as investment for retirement

Many Chileans do not have pension plans that will allow them to live comfortably in their retirement and thus look for other investment options during their productive lives. In this sense, the real estate market is emerging as an interesting investment mechanism, offering surplus value, fairly assured profitability and minimal risk given Chile’s stable economic record.

Record car sales boost demand for auto loans

Chile has seen record car sales in recent years, with around 80% of purchases being made through loans according to the National Automotive Association of Chile (ANAC). Air pollution in cities such as Santiago has prompted the enactment of laws that have a direct impact on automobiles.

COMPETITIVE LANDSCAPE

US dollar depreciation and declining interest rates driving consumption

The Chilean loan market is being driven by interest rate competition. In response to the depreciation of the US dollar during the first quarter of the year, the Central Bank reduced its monetary policy rate, with banks consequently lowering interest rates and helping to boost consumption.

Commitment to transparency boosts consumer finance awareness

In order to make financial services transparent to consumers, all entities that grant loans must meet CAE client information obligations. CAE is an indicator that includes all 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.

Alternative lending options attracting lower-income consumers

Due to stricter regulations in the banking system, non-banking entities such as cooperatives, union funds and retailers offer unbanked people with low salaries the chance to obtain loans in exchange for paying a higher interest rate. People within the lower-income segment sometimes require loans to cover basic living expenses such as food or unexpected events like medical bills, which can be very expensive.

Files are delivered directly into your account within a few minutes of purchase.