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June 25, 2024
Consumer Loans in Mexico. Types of Loan Products and Top Financial Service Providers
Explore the growing demand for consumer loans in Mexico, learn the most popular loan products and leading financial service providers.
Explore the growing demand for consumer loans in Mexico, learn the most popular loan products and leading financial service providers.
The Mexican market opens up a broad prospects for credit institutions.
According to data analysts, the demand for consumer loans in Mexico is constantly increasing. The industry posted a CAGR of 12.2% in 2023.
In Mexico, borrowers have access to a variety of loan products, and their services are offered not only by traditional Mexican banks, but also fintech companies.
It is the variety of loan products and leading providers of lending services that will be discussed in this material.
Loans available to residents of Mexico allow them to cover their targeted and non-targeted lending needs.
An in-depth market analysis showed that the following types of loan products are available in the country.
These are loans that consumers take out at retail stores to purchase goods or services. It can be issued as a direct deposit to the merchant's account or as a credit card for purchases at a specific store.
According to government data resources in Mexico, this is the most popular loan product among the country's residents. It was issued by 42.7% of all borrowers, which exceeds the indicators for Mexican credit cards, mortgage loans, and personal loans.
This trend is explained by the fact that lenders typically offer preferential financing terms, interest-free periods, and other benefits for store loans.
There were 19.3 million credit cards in the Mexican market, with a total transaction of over 572 billion pesos according to data for December 2023:
BBVA Report Results indicate segment growth in Mexican credit cards to 21.2% for 2023.
All the facts listed above indicate the importance of this loan product in Mexico's consumer loan portfolio.
These loans are riskier than the previous loan product. After all, they are not secured by the borrower’s property or funds. At the same time, the credit institution can earn more thanks to higher interest rates.
According to statistics, the personal lending segment in 2023 did not develop as dynamically as others. Its average annual growth rate was 7.6%, and its share in the consumer lending portfolio was 16%.
According to the same BBVA, this credit product represents 26% of the total consumer portfolio in Mexico. In 2023, it showed a growth rate of 9.8%.
A distinctive feature of such loans is that they are secured by the borrower’s salary, which significantly reduces lenders' risks.
The microfinance market in Mexico is growing steadily. According to Market Research Guru, it will grow by 12.8% in 2024-2028.
Loans from microfinance organizations are popular among Mexicans. The results of research in this area indicate that 76% of consumers who applied to microfinance organizations already have at least one loan, of which 11% have six loans or more.
Naturally, an unbearable financial burden leads to overdue debt. Among applicants with multiple loans, 88% of borrowers have late payments:
Lending to the population is carried out not only by pawnshops and banks in Mexico. Fintech companies are becoming more and more popular in the country, according to the latest data, in 2023 there were 773 of them.
Clients of such organizations can count on processing personal loans, payday loans, and installation loans. Among their advantages are quick approval processes and flexible repayment options.
However, the main benefit of fintech companies in Mexico is that they promote financial inclusion. After all, according to statistics, 66 million of Mexicans remain unbanked.
Even such a basic tool as a bank account in the country is used by only 49% of the population. This figure is noticeably lower than in other countries.
Fintech companies are resorting to alternative credit scoring in Mexico, which allows them to successfully lend to the Mexican population.
According to the MexicoBusiness, 59% of new cars in Mexico are purchased using credit.
This is quite a lot, considering that Mexico ranks third in the North American rankings for the number of cars per 1,000 inhabitants.
As for used vehicles, they are bought on credit much less often, credit organizations finance only 1.9% of transactions. The situation is explained by the high level of risk associated with possible hidden defects of such cars.
BBVA Analysts note a reduction in the quantity of mortgages in Mexico by 5.4% in 2023 compared to 2022. Experts explain this trend by an increase in housing prices, they significantly outpace the growth in citizens’ incomes.
Despite this, Mexico's mortgage portfolio continues to grow, according to the latest data, it has reached 1.35 billion Mexican pesos.
This type of loan is issued against the borrower’s property – jewelry, equipment, etc. They differ in small amounts and loan terms.
Pawnshop loans are suitable for those with a low or no credit rating because they do not require a credit check due to the presence of collateral.
According to Condusef, 6.7% of Mexicans use pawnshops to obtain credit, which is behind other types of informal credit such as borrowing from family and friends (19.3% and 13.6%, respectively).
The popularity of the above-mentioned loan products in Mexico is associated with the development of the lending industry in the country as a whole.
According to Trading Economics, the amount of consumer loans issued in the country at the end of 2023 was 1.82 million Mexican pesos.
Industry development trends are visible in the diagram below.
What contributes to this situation in the market of consumer loans in Mexico? Let us highlight the main reasons for the growth of the industry.
1. Economic recovery. According to World Bank, Mexico's economy grew above 3% in 2023, for the second year in a row. This helps to increase consumer confidence and increase spending. Which, in turn, causes an increase in demand for credit products.
2. Technological advances. Innovative technologies are actively developing in the country. This makes lending more accessible and convenient for borrowers. For example, thanks to online platforms, consumers can apply for a loan without leaving home.
3. Demographic changes. According to statistics, Mexico is home to more than 30 million Millennials, representing more than 23% of the country's population. This leaves its mark on the form of consumer lending.
For example, BBVA research showed that the average income of this generation is 12.3% lower than the income of generation X, and the main item of expenditure for this category of Mexicans is housing.
This explains the popularity of credit products such as payroll loans, mortgage loans, and credit cards in Mexico.
4. Development of the gig economy. Freelancing is a common way to make money in Mexico. According to statistics, 13 million independent contractors were living in this country in 2023. Informal employment creates demand for flexible credit solutions.
5. Regulatory changes. In Mexico, National Financial Inclusion Strategy is applied, which aims to enable 77% of Mexicans to own at least one financial product by the end of 2024.
This expands lending opportunities by reducing the number of unbanked Mexicans.
We have prepared a list of key banks where Mexicans can apply for a personal loan.
It is the country's largest bank in terms of assets. It offers consumers extensive lending services, including personal loans, mortgages, and credit cards.
In 2024, BBVA accounted for 24% of all loans issued in Mexico.
The same diagram provides information on other key players in the Mexican banking sector, which will be discussed below.
This bank occupies the second position in the ranking of financial institutions with the largest share of loans, it concentrated 15% of transactions.
It ranks among Latin America's most valuable banking brands and has a strong presence in retail banking.
The bank is part of the global Santander group and is present in all states of Mexico.
It provides its clients with all standard banking services, including lending. Among the offered credit products are personal loans, mortgages, and credit cards.
Santander Mexico accounts for almost 13% of the country's loans.
The bank is part of Citigroup and is recognized as Mexico's third-largest bank by capital in 2023, behind only BBVA Mexico and Banorte.
Acts as a major supplier of personal loans, credit cards and mortgage in Mexico.
It is the main operating company of the Grupo Financiero HSBC, SA de CV, which included into the four largest banking and financial companies in Mexico.
It is distinguished by an extensive network of branches and a variety of financial products available.
This is a branch of a Canadian international company that provides financial services, including in North America.
It offers banking services for different categories of the population, including lending for individuals.
It is a financial company that provides services in Mexico through its subsidiaries.
It offers consumers a wide range of banking services, including various types of consumer lending.
It is one of the largest and fastest growing community banks in the country.
It provides a wide range of services, including loans and credit cards.
This bank operates as a branch of Afirme Grupo Financiero and provides all the necessary financial services to the Mexican population.
Among other things, it specializes in issuing consumer and car loans, mortgage loans and credit cards.
It is a banking network that operates in Mexico and abroad, offering its customers a wide range of credit products.
Banco Azteca truly became known for its extensive operations in the field of consumer loans and microcredit.
Fintech in Mexico is a rapidly developing industry that is engaged in lending to the public alongside banks.
According to Fintech News, Mexico's fintech ecosystem takes place as the second largest in the region, trailing only Brazil.
Here are some of the major fintech lending companies in Mexico.
The company was founded in 2012, is located in Guadalajara and specializes in online microloans. Among the main credit products available to users are short-term loans and the “buy now, pay later” service.
According to Statista, as of January 2023, Kueski has issued 10 million loans, doubling the 2021 figure.
One of the main advantages of the company is quick decision-making on loan applications thanks to the use of advanced algorithms.
This company has been operating in the Mexican market since 2013 and focuses on providing loans to small and medium-sized businesses (SMBs).
It specializes in lending to businesses that are underserved by traditional banks. This is possible through the use of a patented algorithm for assessing creditworthiness.
This is another fintech startup that focuses on lending to the SME sector. It offers entrepreneurs simple, reliable and transparent asset-backed financial products.
Founded in 2012, this company offers businesses a full range of business technology solutions. These include POS terminals that accept multiple payment methods, remote payments, and personalized credit.
The company guarantees borrowers a quick decision on their application, no need for collateral and minimum requirements for documents.
Founded in 2016, this fintech startup aims to help users manage their finances through specialized tools. For example, consumers benefit from real-time transaction notifications and expense categorization.
The company offers its customers a digital account with access to an international Mastercard and a mobile application.
This company appeared on the Mexican market not so long ago, in 2018. It is aimed at the country's low-income population.
The main product that the financial platform offers its users is a credit card. The company claims that they have a high approval rate for applications, and there are no account maintenance fees.
Stori also does not require borrowers to have a credit history, they use the services of alternative data vendors.
The company was founded in 2020. It offers businesses an expense management platform. One of its functions is issuing and managing corporate cards for employees.
Users have access to extensive functionality, which includes real-time transaction tracking, setting spending limits, and much more.
RiskSeal is active in the Mexican market, fully understanding the unique aspects of the country's lending industry.
We supply an effective scoring system using alternative data for Mexico that fosters financial inclusion and enables lenders to extend credit to the unbanked population.
With RiskSeal, Mexican fintech businesses get over 300 data points about each potential borrower.
We provide our clients with 140+ online services for digital footprint analysis, including regional platforms, such as Didi, Rappi, Telcel, AT&T, Indeed, Computrabajo, and more.
With advanced analytics, the RiskSeal scoring system allows you to assess the creditworthiness of 83% of Mexicans, and this is not the limit.
RiskSeal provides the fintech industry in Mexico with expanded capabilities in the field of credit scoring. Thanks to in-depth analysis of various online resources, our clients get more than 300 data points about potential borrowers. This allows lending to the unbanked Mexican population.
RiskSeal collects over 300 client insights, such as online registrations, accounts on social networks, paid subscriptions. To verify identities, our solution performs face matching verification, name analysis, and location match analysis.
RiskSeal delivers Mexican fintech providers digital credit score, trust score, and behavioral and solvency metrics.
The most popular credit products in Mexico include store credits, credit cards, mortgage loans, and personal loans.
Recently, consumer lending in Mexico has been experiencing stable development. This is facilitated by the restoration of the country's economy, the introduction of technological innovations, and certain demographic and regulatory changes.