The reduction in the maximum interest rate that was ordered by the Federal Council created a challenging market environment for the Consumer Finance business in 2016. The personal credit business held up well; new volumes and portfolios continued to grow and the company expanded its market position. The leasing business on the other hand suffered from strong competition by manufacturers’ own leasing companies. Innovative new products improve merchant and end customer loyalty.

cashgate’s recipe for success was the continued development of its successful price model for the personal credit business: the maximum interest rate of ten per cent for personal credits that applied from mid-2016 was implemented at an early stage. The new pricing model that has been in use since April was adjusted to the new requirements and applies transparent interest rates of 7.9 and 9.9 per cent. cashgate also introduced an interest rate of 4.9 per cent for customers who own residential property. Thanks to the low interest rates and transparent loan approval criteria, the model met with a positive response from borrowers and partner banks, allowing cashgate to compensate the falling prices with higher volumes.

Regulatory intervention into market structures

The reduction in the maximum interest rate ordered by the legislator and the extension of the right to revoke telephone sales of personal credits to 14 days exerted pressure on the market. cashgate continued to put its trust in its own channels – direct business, its branches and the online channel – and once again posted robust growth in the reporting year. This was supported by the fact that cashgate managed to grow its personal credit business both in terms of new business and in the size of its portfolio.

Leasing improves customer loyalty with new offers

In the leasing business, cashgate reacted to the intense competition from car manufacturers’ own leasing companies with innovative new offers. A special product for senior citizens was launched in May. As this product helps to improve the mobility of retired people, it targets a new customer segment. The product met with a positive reception by the target group, which has not been served by the market before, as well as by the car dealers.

In November, cashgate launched its offer for car dealers to finance in-stock vehicles. This makes it possible for garage owners and importers to finance their in-stock vehicles through cashgate. cashgate expects this new product to strengthen its partnership with existing dealers and attract new dealers as partners. The first customers have already been acquired.