In general, the Germans are known as the savers’ people: Consumption saves many German citizens. Having to take out a loan is often perceived as a blemish. However, given the low level of interest rates, Germans’ attitudes to credit are gradually changing. This shows a current data analysis of Schufa.

Trend towards higher loans with longer maturities

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Although the low interest rate does not ensure that the Germans indulge in unrestrained consumption, instead of their money continue to diligently put into the savings stocking. However, the readiness to meet consumer needs directly by using a loan, rather than saving a lot on it, has apparently increased, even with larger purchases. As this year’s “Schufa Credit Compass 2016” shows, in 2015 Germans raised significantly higher loans on average than in the previous year. At 9,552 USD, the average amount of consumer loans taken out last year – mortgage lending was excluded. This continues the trend towards larger loan amounts, which already started in 2014 with an average loan amount of 8,792 USD. Since 2013, the average amount borrowed has increased by almost 1,600 USD.

34.5 percent of all newly concluded loans in 2015 even had a volume of more than 10,000 USD. Two years earlier, their share was only 28.4 percent. Apparently, many consumers have decided to use the historically low interest rates for their own purposes. And since the low interest rate is usually guaranteed for the entire term, many borrowers opt for a longer term, which provides for lower monthly installments. The average term for loans taken up in 2015 is 47.3 months – more than half a year longer than in 2010, when an average loan was already paid off after 41.2 months.

Consumption within the financial possibilities

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However, the Germans do not become cocky when it comes to consumption: the number of newly concluded loan agreements hardly changed in 2015, at around 7.4 million, compared with the two previous years. This shows, “that the consumers use financing possibilities also controlled in the current low interest rate environment”, so the estimate of the Schufa chairman of the board Dr. Ing. Michael Ferny. It is therefore not just due to the currently very favorable conditions recklessly borrowed. Overall, Schufa registered around 17.3 million current installment loans in its database at the end of 2015. This means that at the turn of the year 16 percent of the over 66 million consumers registered with Schufa had a current loan. The quota makes it clear that borrowing is no longer uncommon.

Responsible use of credit

The extremely low default rate shows that the Germans can handle financing responsibly and assess their financial options well. “The credit behavior of German consumers is exemplary across all age groups. 97.6 percent of completed loans were repaid smoothly. This is again a pleasingly high level. At 90.7 percent, the proportion of consumers to whom Schufa has exclusively stored positive characteristics remains high, “said Schufa CEO Ferny. Also the fact that borrowers inform themselves more thoroughly before the application and catch up on several offers, indicates that the Germans deliberately dealt with the topic. The number of condition requests increased significantly in 2015 by 18.5 percent to a total of 19.5 million. As early as 2014, this trend had suggested a more thorough comparison: At that time, the number of condition requests rose by seven percent year-on-year to 16.5 million.