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"No money down" likely to disappear from car leasing

Hungarian car leasing companies are likely to raise the minimum down payment from 0% to 20% from January 5 under a regulation by financial market regulator PSzÁF drawn up after consultations with the Hungarian Leasing Association, the association told MTI.

PSzÁF will also introduce a regulation reducing the maximum run of leases to 96 months from 120 months.

The new regulations will cause a drop in retail car sales, but should weed out buyers that present significant risk, said association chairman György Mészáros.

In a statement on Monday, PSzÁF advised leasing companies to set aside additional reserves for risky lending constructions, such as those with low initial installments, long runs or no repayment of principal until years into the loan's run.

The association said Hungary's vehicle leasing industry was in a state of crisis even before the global financial crisis because of pressure by importers to keep new car sales steady, unrealistic list prices, a lack of transparent pricing and minimal margins that forced leasing companies to charge clients higher financing and insurance fees. The global financial crisis has made refinancing more difficult and more expensive. (MTI – Econews)