Increase in Loan Uptake Due to Back-to-School Season

60% of borrowers already provide for the amount needed for the start of school in June and July, which is indicated by the steady increase in the number of loan applications citing financial difficulties in starting school, while the number of those who finance the start of school with a loan has slightly decreased compared to last year, according to the Provident Financial Ltd.

The financial service provider's own data show that the families concerned are taking out loans of between HUF 50,000 and HUF 150,000 and most of them are using them to finance the purchase of school supplies.

Although the school year does not officially start until September 2, Provident Financial Consultants' experience shows that families are already thinking ahead and start planning for the opening of the school year in the autumn, essentially after the end of the previous school year. According to parents, buying the right school supplies and aids is a major financial expense for almost all families, and it is worth planning consciously. More than 60% of advisors working for Provident noted that parents had already begun submitting back-to-school loan applications in June and July, but the number of applications was down from a year ago, with 2.5% fewer in June and 11.3% fewer in July than last year.

The data show that advisers in the Eastern Hungary region and Budapest in particular reported a rise in loan applications due to the start of school, but several small towns in Southern and Western Hungary reported similar trends.

Purchasing a school bag or other school-related equipment (e.g. pencil cases, calculators, other supplies), which are a major expense, is the biggest challenge for 70% of parents, Provident advisers reported. Similarly, purchasing necessary clothing is perceived as a major financial expense, with 64% of respondents citing this item as a burden.

The purchase of small everyday school supplies (notebooks, pens, pencils) is a financial burden for 50% of respondents, while 15% felt that the purchase of sports equipment was a major expense. Although the number is low, 8% also find it difficult to pay class fees.