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🇦🇷 Argentina /Economy & Trade

Are Banco Nación’s new car-loan rates fair, or a rip-off?

From Clarín · () Spanish

Translated from Spanish and summarized by DistantNews. Read the original for the full story.

At a glance

News Named sources New plan
  • Banco Nación launched car loans at UVA plus 19% for customers and UVA plus 25% for noncustomers, with financing of up to 100 million pesos over one to five years.
  • Minister Federico Sturzenegger defended the program, while economists Fernando Marull and Roberto Cachanosky called the rates excessively expensive.
  • The loans aim to support vehicle sales after falling production and registrations prompted some automakers to suspend workers.

Banco Nación’s new car loans have quickly become the focus of a sharp dispute between government officials and economists over how much borrowers will really pay.

The Banco Nación has just launched a line of loans to buy cars at a rate of UVA plus 19%. More supply is always a good thing, however, I see some questioning of the rate on this network, so I want to argue that what Banco Nación is doing is not only very good, but could radically improve access to automobiles in Argentina.

· Federico SturzeneggerThe minister defended the new lending program after criticism of its interest rates.

The bank launched financing of up to 100 million pesos per customer for new vehicles, pickups and utility vehicles, as well as used vehicles up to 10 years old. The loans run from one to five years. Customers face a rate of UVA plus 19%, while noncustomers pay UVA plus 25%. Because the loans adjust with inflation, the total nominal annual rate would reach 40% for customers and 46% for noncustomers if inflation over the next 12 months reaches the projected 21%.

Federico Sturzenegger, the minister of deregulation, defended the program in a lengthy post. He argued that more credit supply was beneficial and said the rate did not force anyone to borrow from Banco Nación. “If you don’t like it, you move on. If another bank wants to offer it cheaper, welcome,” he wrote. Using the bank’s example, he said a five-year UVA loan would require a monthly payment of 260,000 pesos for every 10 million pesos borrowed, with the payment later adjusted for inflation.

UVA plus 19%. A rip-off at BNA.

· Fernando MarullThe economist criticized the cost of Banco Nación’s car loans.

Economists attacked the cost. Fernando Marull, head of the FyMA consultancy, called the rate “a rip-off at BNA.” Roberto Cachanosky said the loans could end up increasing the number of delinquent borrowers. Cachanosky compared the offer with a five-year car loan in the United States, which he said carried a 6.9% annual cost and a real interest rate of 3.5%, against a 19% real rate for the Argentine UVA loan.

This and swelling the delinquent-borrower account are the same thing.

· Roberto CachanoskyThe economist warned that the expensive loans could increase defaults.

The government agreed the measure with automakers to lift sales after declines in production and vehicle registrations. The article says some manufacturers responded to the downturn by suspending workers. Banco Nación also offers a peso-denominated alternative with fixed rates of 36% nominally, although the source excerpt ends before giving further details.

If you don’t like it, you move on. If another bank wants to offer it cheaper, welcome.

· Federico SturzeneggerHe argued that borrowers were not required to take the Banco Nación loan and that competition could offer better terms.
About this summary

Originally published by Clarín in Spanish. Translated, summarized, and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

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