25 years ago, the wall fell and the two German states separated up to this point became once again a common state. However, the differences between Germany and the former GDR are not completely balanced in all areas. In addition to the differences in wages that prevailed before, there are also differences in financial behaviour. For example, a large German online comparison portal has examined the credit behaviour of East German citizens with the West German citizen. The result of this study revealed that people in the East apply for less credit than people in the so-called “west” of the Federal Republic. There, the average credit volume is 12 percent higher than in the East. It is interesting, however, that the difference in the interest rate level for loans between East and West is by far not so serious, but more so later.
Loans over 10,000 euros the rule
On the other hand, the amount of credit was significantly higher in the West, at an average of 11,585 euros. The extent to which the post-existing pay gap between East and West could play a role in lending or lending, is unfortunately not apparent from the study of the comparative portal. On the other hand, it is interesting to look at the level of credit by federal state, because here in the west of Bavaria, Baden-Württemberg are at the forefront, whereas in Saxony, Thuringia and Mecklenburg-Western Pomerania the credit volume is the lowest. Obviously, in the federal states, in which according to current statistics the highest per capita income is generated, the credit demand is also highest. In general, however, there is a marked decline in the amount of credit, because only one year earlier, the average credit amounts were still well over € 15,000 nationwide!
Income does not affect interest level in credit!
As mentioned earlier in the article, the difference in the level of interest rates in the east-West comparison is not so serious in comparison with the credit sum, because for an example loan of 10,000 euros with a maturity of 84 months, the banks in the West estimated an average effective interest rate of 4.83 percent. Customers from eastern Germany received this credit combination at an average effective interest rate of 4.97 percent. The interest rate difference between East and West is thus about 3 percent.
Faster repayment of loans in the East
The final finding was also that East German borrowers want a much faster repayment of a loan taken compared to the West German citizen. On average, they choose shorter loan terms (44 months in the East, 47 months in the West). In the East, loans are used mainly for the financing of consumer goods (49 percent), such as furniture or technology, and for car financing (40 percent). In West Germany, on the other hand, car purchase is the most common reason for borrowing (42 per cent) – directly followed by consumer loans (41 per cent).