Car loans and microloans in Uzbekistan: the rate is growing — availability is questionable

Against the background of continuing inflationary pressure and high banking risks, the Central Bank of Uzbekistan has published fresh data on the average cost of loans to the population. As of July 14, the average annual rate on car loans in the country was 24.3 percent. The burden on microloans is even more noticeable — 34.5 percent per annum.

The monitoring covered the leading commercial banks of the republic. The spread between minimum and maximum interest rates remains significant, reflecting differences in credit policies and customer segmentation.

The most affordable conditions for car loans are fixed in Tenge Bank, where the rate is 17.4 percent per annum. The top ten banks with the lowest rates also included Ipoteka Bank (21.1 percent) and Orient Finance Bank (21.2 percent). At the same time, Hamkor Bank, Infinbank and Madad Invest Bank remain among those offering the highest interest rates on car loans.

The situation with microloans is even more contrasting. The lowest rate is in Alokabank, where the annual rate is 22.1 percent. It is followed by Infinbank with 25.6 percent and the National Bank of Uzbekistan with 26 percent. The upper limit was headed by Apex Bank, where the rate on microloans reaches 40.8 percent.

The Central Bank explained that when calculating the average values, preferential credit programs were also taken into account, including for small businesses and startups. However, even taking into account subsidized products, the average cost of borrowing remains high, which limits the availability of consumer credit for the general population.

Economists attribute this to the general macroeconomic policy of the country, where the Central Bank maintains a tight monetary position. High interest rates are a consequence of inflationary pressures and the challenges of maintaining the national currency's exchange rate.

The observed level of interest rates on car loans also reflects the lack of liquidity in the new car market, rising prices in the segment and lowered expectations of banks for repayment of borrowed funds. In turn, the microloan market suffers from higher default risks and a short-term loan structure, which leads to significant overpayments.

It is expected that if the macroeconomic parameters stabilize and banks ' access to cheap resources increases, interest rates will gradually decrease. However, at the current stage, retail lending in Uzbekistan remains premium in nature, remaining inaccessible to a part of the population without a stable income.