EUROPE FINANCE
Innovative Financing in Turkey Global Banking & Finance Review spoke the experts at ALJ Finansman A.S. (ALJ Finans) about financing in Turkey and the innovative solutions available.
Can you tell us about ALJ Finans services and its history?
Nilüfer Günhan: ALJ Finansman A.S. (ALJ Finans) is a financial services company specialized in car loans in Turkey. ALJ Finans serves as a partner of ALJ (Abdul Latif Jameel)owned Toyota, Lexus and Otoshops (used car brand) distributor in Turkey and provides new and used car auto loans via Toyota, Lexus and Otoshops dealers as well as other specialized used car retailers.
ALJ Finans offers instalment loans to customers wishing to buy a new or pre-owned vehicle. Disbursement of the loan is made directly to the sellers on behalf of the customers with the delivery of the good/services to the customers. Loan repayments are made by the customers to the finance companies. ALJ Finans has operations since 2013 all around in Turkey and is headquartered in Istanbul, the largest city of Turkey. ALJ Finans offers its services under white label operations as Toyota Finance, Lexus Prime Finance, Otoshops Finans and ALJ Finans. How do finance companies operate in the Turkish automotive sector, how big is the sector?
Soner Irmak: Consumer Finance sector’s history dates back to 1995. Since 2006, the sector operates under the supervision of BRSA (Banking Regulation and Supervision Agency). Until year 2000, Finance companies were very strong in instalment loans for durables (White & Brown goods, furniture, etc.), but after credit cards started offering instalments, the potential in durable goods died. Sector continued to grow in vehicle loans and mortgages. Since 2016, telecommunication companies and home products companies have initiatives to launch retail finance operations at PoS.
Finance companies’ regulation in Turkey only allows the financing of a purchased good/ service at the PoS to individuals and corporate customers. Cash loans could be provided only by Banks. 13 companies operate in the finance sector including ALJ Finans, majority of which are automotive captives. Two of them are mortgage companies. Captive companies (parent finance companies of the distributors/importers) are the main players in the Turkish retail car finance arena with 61% share. While mainly captives have more than doubled their share in commercial car loans, banks still have 53% share in commercial car loans due their strong banking relationships with commercial customers. Issue 5 | 9