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As the cost of living in Spain continues to rise at a far faster rate than income, countless households are finding that there’s simply too much month at the end of the money. As a result, many are forced to turn to credit to cover the basics and as a result, debt is increasing at rates not seen since before the 2008 financial crash.

 

But most Spanish homes aren’t going into debt over frivolous pursuits. During the month of May alone, financial institutions approved credit to the tune of €3.873 billion for the purchase of large household items and services. That’s a 15% year-on-year increase that pushes consumer credit to a new record.

 

So far in 2025, transactions worth €17.961 billion have been granted, an increase of almost 17% compared to the €15.3 billion recorded between January and May of the previous year, according to the Bank of Spain (BdE). The tailwinds blowing for the Spanish economy, coupled with the favourable outlook for the coming months and contained unemployment levels, mean that financial institutions are more inclined to approve lines of credit.

 

The 7th Consumer Loan Barometer, compiled by Asufin, shows that the willingness to apply for this type of loan is at an all-time high. This survey, conducted based on opinions up to March, shows that around 34% of people planned to apply for a consumer or home improvement loan, the highest level since 2018, when the report began.

 

Along the same lines, the Cetelem Observatory collects date on monthly purchasing intentions among people living in Spain. It found that most people were planning to spend a considerable amount of money on holidays, sports activities, electronic devices, furniture and household appliances. Now, while these purchases won’t necessarily all be financed by credit, they are the typical things families take out loans for.

 

Added to these goods is of course the car, the undisputed king of instalment financing in Spain.

 

Small consumer loans have a number of unique characteristics. They are designed to cover personal needs for amounts ranging from €200 to €75,000. They are designed to be easily accessible, because banks are protecting themselves with higher interest rates. In May, the average cost stood at 6.97%, a level it has hovered at over the last five months.

 

Despite the safeguards, the amount of outstanding debt that still needs to be repaid is currently sitting at €107.5 billion. The last time it reached this level was in August 2008, just one month before the bankruptcy of Lehman Brothers. The first time it crossed the €100 billion mark since the last recession was in March 2024, from which point on it has continued on an upward path.

 

 

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