The increase in WIBOR in the last six months resulted in an increase in the leasing instalment for a mid-class car by approx. 184 PLN net per month – estimates the Carsmile platform. He adds that if the current forecasts for further WIBOR growth are met, the leasing instalments will increase by another 94 PLN in six months.
Carsmile experts noted that the monthly WIBOR increased from 0.18 percent in the last six months. up to 3.82 percent Such a large increase in interest rates translates into an increase in the leasing instalment for a car by almost 10 percent. – they pointed.
Vice-president of Carsmile, Michał Knitter, gave the example of an entrepreneur who wants to finance the purchase of, for example, a Nissan Qashqai with a leasing contract for 5 years, with a payment of 12000 PLN as own contribution, the agreed redemption at 1,200 PLN net and the amount of financing in the amount of 120000 PLN net.
184 PLN higher leasing instalment
“At the current level of interest rates, this entrepreneur will pay 2197 PLN net per month, the same conditions six months earlier resulted in an instalment of 184 PLN net lower” – reported Knitter.
He added that based on the quotations of FRA contracts (interest rate futures), it can be assumed that in six months the WIBOR 1M rate will increase to approx. 5.6 percent. which may mean for this lessee an increase in the instalment by another 94 PLN to 2291 PLN net per month.
“On the other hand, following the recommendation of the Polish Financial Supervision Authority that the banks should use a 5 percentage point increase in the target instalments, of which 4.25 percentage points remained after the last MPC decision, the instalment amount can be estimated at 2,426 PLN, which is compared to the level of September 2021 would mean an increase in the monthly burden by 413 PLN net “- he calculated.
He pointed out that fixed-rate products are an alternative to financing based on floating interest rates. “However, they are not very popular and usually you have to ask for them, it is also in vain to look for specific information on the websites of individual lessors” – he noted.
He added that when considering the choice of a lease with a fixed interest rate, it must be assumed that in this case the instalment will be higher than the instalment with a variable interest rate calculated for the current WIBOR level.
“In order to estimate how big this difference is and at what WIBOR increase the surplus of the initial instalment will start to pay off, it would be necessary before signing the leasing contract to carefully compare what is the difference in the instalment for a fixed and variable interest rate” – he said. “Provided that the leasing company gives customers such a choice at all,” he added.
He also pointed out that the market situation is nervous, and the results of such a simulation may literally change from day to day.
Carsmile estimates show that for the selected Nissan Qashqai example, the difference between a fixed rate lease and a floating rate lease is approx. 135 PLN net per month.
“Such a difference means that the fixed instalment would be equal to the variable instalment only if the 1M WIBOR increased by 2.75 percentage points compared to the current level, i.e. to 6.57%, which is more than the market predicts for the next six months” – Knitter pointed out.
According to the expert, an alternative to leasing may be long-term rental. “The market does not have uniform standards as to what happens with a car subscription in the event of abrupt changes in interest rates, which we are currently observing.
Before making a decision, you need to read the policy of the rental company in terms of the impact of changes in market rates on the amount of the subscription and the provisions in the contract It may happen that the instalment will not be increased due to the WIBOR increase, but it may be increased, for example, due to an increase in inflation, and these two factors go hand in hand “- he explained.
According to the expert, during the term of the rental contract, instalments should not be raised at least in a few companies on the market that argue that in the case of rental, the subject of the contract is a strictly defined rent, and not selected financial terms.
“The value of the rent under the contract is applied after its start-up, i.e. the release of the car, until the end of the rental period, unless there are factors that necessitate a revaluation. However, this is never due to a change in the interest rate. Factors that may cause an increase in an instalment are excessive loss ratio or exceeding the established mileage limit “- he said, citing one of the companies.
Using the WIBOR rate to calculate the instalment
He added that rental companies use the current WIBOR rate to calculate the instalment, which means that the instalment calculated (for a new client) today and in a month will be different if the rates increase during this time. The instalment, however, should not change during the rental agreement. “Importantly, in the case of rental, a fixed monthly instalment is also a way to avoid increases in servicing or insurance costs.
Even if the rates on the market increase, as is currently the case, the rent will not change, unless the contract regulates it otherwise” – he pointed out.
According to Knitter, another way to counteract rate hikes could be a car loan with a fixed interest rate. “There are fixed rate car loan offers on the market, but they are not very popular” – he noted.
Source: Bankier
