Germans are increasingly buying consumer goods using installment loans. The trend is particularly evident among younger consumers, according to a Postbank survey. Easily available installment loans can quickly become a debt trap.
Installment loans are becoming increasingly popular in Germany
Postbank has presented the results of its representative survey on installment loans. According to the new figures, Germans are much less reluctant to buy consumer goods on credit today than they were eight years ago. 32.7 percent of those surveyed took out an installment loan, in 2014 it was around 21 percent. The basic aversion to this type of credit has shrunk significantly from 43.4 to 31.3 percent.
Not only the attitude towards installment loans has changed noticeably. It is true that a car, new home furnishings or renovations are still often financed with it, but now it is too more travel, clothes or Christmas presents. An increase of 370 percent has been observed for clothing and 240 percent for Christmas gifts.
especially the younger generation often uses the “buy now, pay later” model. One in four respondents aged 18 to 24 say they buy clothes on credit. One in eight finances their vacation trips with an installment loan. When it comes to spending on hobbies, it is more than one in six (source: Focus).
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Installment loans: Customers fall into the debt trap
Installment loans contain particular risk potential. The risks are easy to underestimate, especially in times of high inflation when your money loses value. If customers can no longer pay the installments, there is a risk of a spiral of debt from which those affected can sometimes find it difficult to get out.
Consumer advocates generally recommend only taking out a loan if if it is really needed. However, financing vacations or other short-term investments with an installment loan is not recommended.