Mexico Personal Loan Market: Overview
Personal loans are available in Mexico; nonetheless, Mexicans with established history with the commercial banks are the beneficiaries of the banks personal loans. On the other hand, middle-class employees looking for personal loans must ensure that their salary payments are deposited directly to the bank accounts to qualify for personal loans.
An overview of the personal loan market to low and middle income, the working class, people in Mexico
The processes involved in accessing personal loans in Mexico and especially through commercial banks makes lending a reserve of the affluent. According to the World Bank data, only 39% of the people aged fifteen and above have bank accounts in Mexico, which clearly suggest that many Mexicans are undeserved when it comes to banking activities. The gap in the banking industry continues to present huge opportunities to the fintech lending sector that have experienced significant growth since 2013. Prior to the establishment of the fintech ventures, Mexicans without bank accounts turned to friends, saving clubs and stores for short-term loans.
A majority of fintech lending ventures such as Kueskis charge an average interest rate of 25%. Borrowers using credit cards to acquire loans are charged an average interest of 28% whereas those taking personal loans under US$1250 pay an interest rate of between 60% and 69%. The high interest rates in the personal loans markets are attributed to the low average credit and the high operating costs.
Types of institutions or businesses that offer personal loans to working people (considered middle/low income or middle class)
Because commercial bank personal loan lending in Mexico is a reserve of the affluent, the country has experienced the unprecedented growth of the fintech ventures. With over half of the country’s population without bank accounts, technology has impacted the lives of Mexicans who are now able to access personal loans through their mobiles phones and other mobile devices. Among the notable institutions and businesses that offer personal loans to the working class individuals also considered low or middle class are microfinance institutions, fintech ventures and other non-bank financial institutions.
For instance, PG impact investments a private equity investor in Bayport Mexico recently announced that it will offer loans to the lower middle-income employees in Mexico. Those targeted are healthcare workers, teachers, and middle-class clients seeking to increase their access to affordable financial products. On the other hand, online lenders that offer personal loans to the low and middle class in Mexico include Cohete an online payday lender that provides an average of 1,500 loans a month and Kueksi an online lender that lends microloans averaging US$ 200. Others online lenders include Yotepresto, Prendanet, Kubo and Mimoni, although these online lenders are still tiny compared to the traditional lenders such as commercial banks. Some traditional lenders are beginning to feel the heat, and in response, they are also offering online loans with the objective of directly competing with the small online lenders.
A list of prominent companies that offer personal loans to middle-class people in Mexico.
Kueski headquartered in Guadalajara, Jalisco, Mexico, was founded in 2012 and is one of the most prominent online lenders for the middle class in Mexico. The company is one of the fastest growing online lending platforms and has raised close to $39 million since 2012. Kueski offers loans that range from $1000-$2000, with payment terms that range from 1-30 days. Kueski is the most used online lending platform in Mexico as it offers immediate loans.
Konfio was launched in 2013 and has its headquarters in Mexico City; the company offers loans to the middle class with loan terms ranging from 4-36 months.
Mimoni is headquartered in Mexico City and was founded in 2008, since its inceptions the company has raised over $15 million in funding. The company offers three loan amounts, $4,000, $5,000 and $6,000, with an annual fixed rate of 401%.
#4. Kubo. Financiero
Kubo. Financiero has been in existence since 2012, and it offers loans ranging from US$200 to US$ 25,000. The company allows weekly, biweekly, or monthly payments with a maximum payment period of 36 months.
A list of startups recently entering the personal loan market in Mexico.
Various startups are setting up their foot in the Mexico personal loans market, they include Aspiria, Credilikeme, Doopla, El Buen Socio, Cohete and Finv. It is important to note that these lenders are also striving to get into the untouched Mexican personal loan lending market.
We began this research by consulting financial sector experts in the personal loan markets in the Mexico. With the help of the financial experts through their respective websites, the research team identified key players in the personal loan market industry. It is important to point out that our research only focused on the personal loans meant for the low and middle classes in Mexico. With this in mind, we narrowed our search to the companies that only give personal loans to the low/middle class and the working middle class in Mexico, and through this approach, we managed to exclude big financial institution that offers personal loans to the affluent. It is after narrowing down our search to the companies that offer loans to the low and middle-class populations in Mexico that we were able to identify the companies involved.