Who will pay 50% of the loan to watch Messi play? Argentina Will
Argentina are so crazy about football that the lenders are betting they will pay 50 percent interest to finance their trip to the World Cup in Russia this month.
BBVA Banco Frances SA, a local unit of a Spanish bank, has aired a television advertisement that prompted Argentina to support Lionel Messi and his colleagues by taking one of their seven-year loans. The lender offers up to 1 million pesos (US $ 40,000) paid in 84 installments, with an additional incentive that if you make all payments, you will not pay any taxes and fees in the last year.
Now, paying 50 percent interest every year effectively for a loan may look like madness even for the deadest football fans, but with Argentine inflation running at more than 25 percent and the central bank pushed its benchmark interest rate to 40 percent last month, Bid BBVA looks less heavy. High inflation is an incentive to borrow and make payments later when money is cheaper. BBVA Frances’s personal credit portfolio grew by 80.5 percent in the first quarter from a year earlier as Argentines arrive to take out mortgages and consumer loans.
“Such interest rates can seem crazy to anyone outside Argentina, but Argentina has become an expert in playing the inflation game and kicking the cans down the road,” said Juan Alonso, an analyst who covers BBVA for TPCG Valores SA in Buenos Aires. “An Argentine does not see interest rates, they just ask about the monthly payments they have to pay. If they have a chance to pay off the trip to the World Cup for seven years, they will take it. ”
Representatives for BBVA Frances in Buenos Aires declined to comment on interest imposed by the bank or the number of customers using the loan for the trip.
BBVA Frances has made 8,500 of the loans, borrowing about 1.2 billion pesos in total, since introducing the product in August. The original term of the loan offers an annual interest rate of 32 percent, which with taxes and fees implies a real interest rate of 46.38 percent. The bank raised interest rates to 34 percent in March, taking borrower’s financial costs up to 49.85 percent.
La Albiceleste, or a white skyblue as a team dubbed for national colors, is one of the favorites to lift the trophy this year and is always counted on followers eager to support it. This year is no exception with Argentina who has bought 52,999 tickets, in the top 10 behind countries such as the US and Russia, of more than 2 million sold so far, according to FIFA.
Taking debt in installments is a proven strategy used by many Argentinians to get inflation. Loans such as those from BBVA Frances are also a major way for many people to buy tickets and travel after their currency has fallen more than 25 percent this year. The country is negotiating a $ 40 billion credit line to help lift the budget deficit and soothe investors’ worries about the country’s economic outlook.
For now, fans can travel to Russia where Argentina play its first match against Iceland on June 16 in Moscow.
“The World Cup is a religious experience,” said Marcelo Bertolino, who traveled to Brazil in 2014 and will go with his son to attend matches in Russia. “This time it will be expensive because the peso is weaker and the distance, but it’s still worth the trip.”
courtesy : thejakartapost.com
photo : The Jakarta Post
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