Bigbank enters leasing market in Estonia
Bigbank has joined the Estonian Leasing Association and will initially be offering car leasing to business clients before extending the offer to private clients later this year. The bank is entering the leasing market because purchasing cars by taking out a loan is both riskier and less practical for clients when the economy is broken. In the case of leasing, the bank becomes the owner of the vehicle it rents out to the client.
“We’re branching out into leasing at a complicated time, with the auto industry in crisis all over the world and clients feeling very uncertain about big purchases,” explained Bigbank’s Head of Corporate Banking Ingo Põder. “The state of emergency and people’s recession fears have driven car leasing numbers down to just about zero. The leases that people are entering into at the moment were applied for over the last few months and are only now being concluded. At the same time, the market is likely to bounce back before too long, the economy will adapt and demand will recover, because the people who need cars won’t just go without one. And at that point we’ll be toeing the starting line alongside all of our competitors.”
Põder says that financing services do not vanish even in difficult times and that we will likely see an explosion in offers of affordable car sales. “Where Europe’s concerned, German car makers have been hit really hard by the closure of their plants and they’re only now starting to get back into production a step at a time,” he said. “But people just haven’t been buying cars in the last few months, and there’s a lot of residual stock there’s bound to be special deals on. On top of that, countries are coming up with national purchase and support measures for new cars, to protect their manufacturers and domestic markets, just as they did during the last recession – and that will mean even more good deals.”
The Estonian Leasing Association currently has nine members covering approx. 98% of the market. The volume of new sales on the Estonian leasing market in Q1 2020 was 242 million euros, with new contract numbers falling in all asset groups. The quality of the credit portfolio of the association’s members is characterised by the number of leasing payments going unpaid for more than 60 days beyond the deadline, which accounts for 0.5% of the consolidated portfolio of leasing companies.