“Your dream car has never been closer than it is today” say car dealers across Egypt, referring to the easy credit arrangements that are now available for car purchases. Apparently, many Egyptians like the idea. Auto loans have contributed heavily to car sales in Egypt over the last few years. Although there are no official figures on the number of cars purchased in the local market through loans, it is estimated to be more than 50 per cent of all passenger car sales. According to the latest annual report issued by the Automotive Marketing Information Council (AMIC), these increased in 2014 by more than 50 per cent compared to 2013, reaching 207,973 cars worth LE30 billion. “Almost half of all our sales are made through loans,” said Ahmed Sarhan, manager of one of the best-known car dealers in Cairo's Nasr City. Taking out a loan is easy, and people from every walk of life can get the chance to buy the car they desire, he added. Banks give out loans through procedures outlined on their websites or explained by representatives at car dealers. They can be granted to people who are employed by a public-sector or private-sector company and even to the self-employed. A loan can be approved on the same day it is applied for, though conditions must be met. Applicants must be at least 21 years old and not more than 60 or 65, depending on whether they are employees or self-employed, and they must have a net monthly income of at least LE1,500. Some banks have set ceilings of LE500,000 for car loans, covering 100 per cent of the car's value, while others have raised the ceiling to LE750,000 and cover only 80 per cent of the vehicle's value. The minimum value of car loans is LE20,000. Interest rates range from between 7.5 per cent to 11.5 per cent, depending on each bank's policies and taking into account the value of the loan, the amount of the down-payment, and the repayment period which can last anywhere from five to nine years. Documents required by most banks for a loan include a photocopy of a national identification card, a recent utility bill and an official document of proof of income. “The average value of customer loans hovers around LE65,000,” said Ahmed Hussein, director of the car loans department at the Banque du Caire, which has a 16 per cent share of car-financing loans in the Egyptian market. Hussein told the Weekly that the bank intends to increase its car-financing portfolio from approximately LE700 million at the end of 2014 to more than LE1 billion this year. Car loans are constantly increasing and went up by 30 per cent over the last year in comparison with 2013, he said. The steady growth of auto loans, driven by increasing demand in the car market, was making the banks aim to double their credit portfolios, Hussein said. “We might start looking to expand our loan services to places outside Greater Cairo and Alexandria in the near future,” he said. The banks' need to diversify their credit portfolios has made them invest more in personal loans, especially in car loans which are witnessing strong growth rates in all the banks, said Salama Al-Khouly, an economist at the National Bank of Egypt. “During the last five years, the banks started to facilitate car loan procedures and design programmes suitable for all types of consumers as long as they meet the requirements,” he explained. Al-Khouly added that all the banks now have expansion plans in the car-financing sector, in order to cope with the increasing demand. He said that the banks should find new financing programmes to facilitate loans in new markets outside the capital and Alexandria.
