Car lease interest rates have risen by a quarter since 2017

Future cars in Tallinn.
Future cars in Tallinn. Source: Ken Mürk/ERR

Car leases for private consumers have become more costly over the last three years as lease interest rates have grown by a quarter.

Interest rates of car leases have grown slowly but steadily. Three years ago, the average interest of insurance companies stood at 2.21 percent in August 2017, a year later that number was 2.26 percent. This means the rise in price over a year was 2 percent.

A year later, the average interest rate over multiple insurance providers increased to 2.66 percent, marking an 18 percent price increase over the period of 2018-2019.

The rise in prices has not stopped this year as the emergency situation affected car leases heavily, making April-May 2020 the most expensive time to lease a car with the average interest rates growing by 2.84 percent.

The rates dropped a little in the summer but started to rise again in August to an average of 2.78 percent in the last month of summer, making the yearly increase in prices around 5 percent. The increase in price since 2017 is therefore 26 percent.

The Bank of Estonia (Eesti Pank) did not comment on interest rates increasing in comparison to the financial environment.

Board member of AS Swedbank Liising Heli Silluta said their leases are not mirrored by the overall situation of the market. She said Swedbank's interest rates remained largely the same for five years before they increased rates in 2019.

Silluta said: "The magnitude was much smaller than the average market interest rate increase. Interest is related to the client, the value of the leased assets and the size of the deposit. Interest rates are also dependent on whether or not it is a new or used vehicle, interest rates are a bit higher for the latter."


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Editor: Kristjan Kallaste

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