Car banks look to insure loans
So far, Fiat is the only car bank to introduce such a product, but other auto lenders are expected to soon follow suit.
Starting this month, borrowers who take a car loan from Fiat Bank will be able to insure the credit in case they are not able to repay it. The borrower is covered by the insurance once the credit agreement is signed and the premium is added to the loan payment.
According to Fiat Bank simulations, the premium for a 12-month, zl. 10,000 loan will be zl. 9 per month. If the same loan was spread over three years, the premium would be about zl. 11 per month.
"Such products are quite popular in other markets," said Christian Weidemann, deputy president of Opel Bank Polska, which is thinking of introducing a similar product. "It means added value to the bank's operations, because it can offer a more complex service."
Depending on the agreement the bank has with the insurer, it can also help banks improve diminishing margins, Weidemann added, since part of the premium can go to the bank.
In Germany, credit insurance was developed primarily because of demand from consumers, Weidemann said.
"The customers wanted to feel secure," he said. According to Weidemann, currently in Germany about 75% of all car loans are insured using credit insurance.
Powszechna Kasa Oszczednosci Bank Panstwowy (PKO BP), the largest car loan provider, is also considering launching the insurance product.
"Currently we are talking to different insurance companies," said Stanislaw Slaby, head of the car loan division at PKO BP. He sees several reasons why the product can eventually become widespread in Poland.
First, the insurance cost is not very high and secondly, such a solution makes a credit safe from the bank's point of view. "And at the same time, such a credit insurance agreement can be used as credit collateral," Slaby said.
While car banks expect that the product will prove popular with their customers, bankers do not expect its use to spread to consumer credits.
"Compared to other consumer credits, car loans are the largest in size," he said. "That's why the risk they won't be paid back is the highest."
Housing loans, on the other hand, although larger than car loans are already backed by the property they are financing, which is used as collateral. Because of this credit insurance would not be needed for this type of credit.
Starting this month, borrowers who take a car loan from Fiat Bank will be able to insure the credit in case they are not able to repay it. The borrower is covered by the insurance once the credit agreement is signed and the premium is added to the loan payment.
According to Fiat Bank simulations, the premium for a 12-month, zl. 10,000 loan will be zl. 9 per month. If the same loan was spread over three years, the premium would be about zl. 11 per month.
"Such products are quite popular in other markets," said Christian Weidemann, deputy president of Opel Bank Polska, which is thinking of introducing a similar product. "It means added value to the bank's operations, because it can offer a more complex service."
Depending on the agreement the bank has with the insurer, it can also help banks improve diminishing margins, Weidemann added, since part of the premium can go to the bank.
In Germany, credit insurance was developed primarily because of demand from consumers, Weidemann said.
"The customers wanted to feel secure," he said. According to Weidemann, currently in Germany about 75% of all car loans are insured using credit insurance.
Powszechna Kasa Oszczednosci Bank Panstwowy (PKO BP), the largest car loan provider, is also considering launching the insurance product.
"Currently we are talking to different insurance companies," said Stanislaw Slaby, head of the car loan division at PKO BP. He sees several reasons why the product can eventually become widespread in Poland.
First, the insurance cost is not very high and secondly, such a solution makes a credit safe from the bank's point of view. "And at the same time, such a credit insurance agreement can be used as credit collateral," Slaby said.
While car banks expect that the product will prove popular with their customers, bankers do not expect its use to spread to consumer credits.
"Compared to other consumer credits, car loans are the largest in size," he said. "That's why the risk they won't be paid back is the highest."
Housing loans, on the other hand, although larger than car loans are already backed by the property they are financing, which is used as collateral. Because of this credit insurance would not be needed for this type of credit.
