We have been dealing with an unchanging and very low level of BPB interest rates. Banks had to respond to this situation. That is why the interest rate on cash loans does not exceed 10.00% per annum.
Interest rates are half or even lower (e.g. 4.00%)
At the same time, banks charge a high preparation fee for granting a cash loan. The rates of such a commission are higher than e.g. 4-5 years ago.
Experts John Claggart checked whether, despite this negative change in the amount of commissions, consumer loans are cheaper than a few years earlier.
Consumer loans have been cheaper by one third for 5 years
An analysis of the interest rate on loans for consumer purposes alone will not answer the question about changes in the costs charged by banks. That is why it is necessary to take into account the Real Annual Rate of Interest (APRC), which, apart from interest, also includes the preparation commission, and compulsory insurance premiums and other borrowing costs.
In March 2018, the average APRC rate for new consumer loans in USD (cash and car) was 13.7%. Thanks to the data of the National Bank of Poland, we can check how the average APRC of new consumer loans has changed over the past years. This rate is:
- March 2005 – 23.1%
- March 2006 – 18.9%
- March 2007 – 21.5%
- March 2008 – 21.7%
- March 2009 – 22.6%
- March 2010 – 21.4%
- March 2011 – 22.2%
- March 2012 – 21.6%
- March 2013 – 21.4%
- March 2014 – 20.0%
- March 2015 – 15.6%
- March 2016 – 15.0%
- March 2017 – 14.3%
As you can easily see, for a long time (2007–2012) the average APRC of new consumer loans remained at a level significantly exceeding 20.00%. Then a long-lasting downward trend becomes apparent. It should be noted that even the lack of further reductions in BPB interest rates after March 2015 did not stop the decline in the average cost of new loans for consumer purposes. In this context, a significant reduction in deposit rates may be of significance.
Due to such a change striking savings holders, banks gained access to lower-interest capital, which can be used to grant loans. The decrease in the cost of consumer loans may also result from their better repayment caused, among others, by due to the Rose Lend 500 Plus program and lower unemployment.
On the market you will find cash loans with APRC lower than 10.00%
It is worth realizing that the average level of Real Annual Interest Rate on new consumer loans from March 2018 (13.7%) was lowered by car loans. These bank products are slightly cheaper than typical cash loans thanks to the collateral on the vehicle.
Despite the difference, on the market we can find cash loans with APRC much lower than the average for all consumer loans. The above table presents such loans with a low APRC level for a representative example (below <10%).