Credit

Credit ratings, loans and mortgages in Mexico

Since the opening of Mexico’s banking sector in 1998, foreign investments and takeovers have led to a professionalization of the banking system and a larger availability of credit products.

Credit

Nevertheless the Mexican banking system still lags behind other countries in terms of efficiency. Interest rates on credits and mortgages are higher than in the US and Western Europe, while interests rates on deposits are relatively low. Many banks continue to charge high commissions on standard products, and their service level might not be what you are used to in your home country.

However banking services today are far superior to what they used to be a decade ago, and improvements are likely to continue in the future. For now you will be able to access most standard credit products in Mexico – although this might take a while and be a bit more expensive than you thought.

Mortgages in Mexico

All major Mexican banks offer mortgage products in different shapes and sizes. Interest rates are usually higher than in the US and Western Europe, though the exact amount will obviously depend on your personal situation and the type of mortgage you are looking for. To get a Mexican Peso mortgage you need to have a permanent residency status in Mexico. For more information on mortgages check our articles in the property section.

Personal loans in Mexico

Personal loans are available for both specific and non-specific purposes. To get a personal loan from a Mexican bank, you usually need a proof of regular income (salary), a relationship history with your bank and also a good credit record at El Buro. Personal loans are often called prestamos de nomina, with nomina referring to your salary payments securing the loan.

You will also be able to get specific loans for certain purchases such as cars. Car loans are sold by both car dealers and banks and often come in a package including car insurance and other extras.

Credit ratings in Mexico

Credit ratings in Mexico are handled by a single credit rating agency known as ‘el buro de credito’ which is a private organisation run by Mexico’s banks. El buro is a cornerstone of the country's credit system and enables banks and creditors to share the transaction history of borrowers. Your credit history at el buro will be decisive for any type of credit you apply for in Mexico, and there are even some employers who check the credit ratings of potential employees to evaluate their reliability. If you have just moved to Mexico and do not yet have a Mexican credit history, you should collect as many ‘proofs of creditworthiness’ as you can – i.e. former bank statements, referral letters from your bank abroad or a letter from your employer.

Sales tax (VAT) and total cost of credit

All bank charges and credit interests are subject to sales tax (IVA – Impuesto de valor agregado) in Mexico. The real cost of credit is therefore always higher than the nominal percentage quoted.

In addition many banks and credit providers charge a wide range of additional fees and commissions on credit which are often hidden in the small print of the contract. To increase transparency in the credit markets, the Bank of Mexico has introduced a credit standard called CAT (Coste annual total – Total cost per year). The CAT has to be quoted with each credit product and is often significantly higher than the nominal interest fees. However it does not include the IVA, so you have to add taxes to obtain your real cost of credit (except on mortgage interest payments which are exempt from IVA).

If you have any complaints

If you feel that you have been misled on a financial product you can file a complaint at Profeco, which is Mexico’s consumer agency and also monitors financial products and services. You do not need to be a resident in Mexico to file a complaint at Profeco, though the process might take longer for non-residents.

Nevertheless the Mexican banking system still lags behind other countries in terms of efficiency. Interest rates on credits and mortgages are higher than in the US and Western Europe, while interests rates on deposits are relatively low. Many banks continue to charge high commissions on standard products, and their service level might not be what you are used to in your home country.

However banking services today are far superior to what they used to be a decade ago, and improvements are likely to continue in the future. For now you will be able to access most standard credit products in Mexico – although this might take a while and be a bit more expensive than you thought.

Mortgages in Mexico

All major Mexican banks offer mortgage products in different shapes and sizes. Interest rates are usually higher than in the US and Western Europe, though the exact amount will obviously depend on your personal situation and the type of mortgage you are looking for. To get a Mexican Peso mortgage you need to have a permanent residency status in Mexico. For more information on mortgages check our articles in the property section.

Personal loans in Mexico

Personal loans are available for both specific and non-specific purposes. To get a personal loan from a Mexican bank, you usually need a proof of regular income (salary), a relationship history with your bank and also a good credit record at El Buro. Personal loans are often called prestamos de nomina, with nomina referring to your salary payments securing the loan.

You will also be able to get specific loans for certain purchases such as cars. Car loans are sold by both car dealers and banks and often come in a package including car insurance and other extras.

Credit ratings in Mexico

Credit ratings in Mexico are handled by a single credit rating agency known as ‘el buro de credito’ which is a private organisation run by Mexico’s banks. El buro is a cornerstone of the country's credit system and enables banks and creditors to share the transaction history of borrowers. Your credit history at el buro will be decisive for any type of credit you apply for in Mexico, and there are even some employers who check the credit ratings of potential employees to evaluate their reliability. If you have just moved to Mexico and do not yet have a Mexican credit history, you should collect as many ‘proofs of creditworthiness’ as you can – i.e. former bank statements, referral letters from your bank abroad or a letter from your employer.

Sales tax (VAT) and total cost of credit

All bank charges and credit interests are subject to sales tax (IVA – Impuesto de valor agregado) in Mexico. The real cost of credit is therefore always higher than the nominal percentage quoted.

In addition many banks and credit providers charge a wide range of additional fees and commissions on credit which are often hidden in the small print of the contract. To increase transparency in the credit markets, the Bank of Mexico has introduced a credit standard called CAT (Coste annual total – Total cost per year). The CAT has to be quoted with each credit product and is often significantly higher than the nominal interest fees. However it does not include the IVA, so you have to add taxes to obtain your real cost of credit (except on mortgage interest payments which are exempt from IVA).

If you have any complaints

If you feel that you have been misled on a financial product you can file a complaint at Profeco, which is Mexico’s consumer agency and also monitors financial products and services. You do not need to be a resident in Mexico to file a complaint at Profeco, though the process might take longer for non-residents.

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