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Auto Financiers Increased Interest Rates By 75 bps |
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The increasing inflation rate seems to be causing damages in almost all the sectors in India and especially the financial service providers are eagerly trying to get rid of this disastrous condition, by any means. After the banks and loan provider companies have hiked their respective interest rates to fight the inflation, the auto financiers have now decided to increase their interest rates on passenger cars by 75 bps, from 1st July. The sources from the industry have informed that the leading auto financiers like the ICICI Bank, Kotak Mahindra, HDFC Bank and Reliance Consumer Finance (part of the ADAG group) are now charging 15.25% for a 60 month loan in comparison to that of 14.50% earlier.
One of the dealers was talking about the recent hike in interest rates by the auto financiers and said, "These are rack rates. Some companies tweak EMIs a little bit depending on the loan, but by and large, the hike is 0.75% across financiers for a 5 year loan". He defined that for this increase, the person willing to buy a car will have to pay an amount of Rs 2,362 per lakh as EMI for a 60 month loan, that was earlier only Rs 2,325. The dealer added that the number of fresh enquiries for buying a car has also decreased recently.
While talking about the situation in the Indian auto sector at the moment, the dealer said, "Suddenly what was a bullish year for us is looking bearish now. Customer queries have come down. We will now have to see how the current situation takes shape". The dealer said that the cash purchases in the small car segment did increase during the month of May and during the first week of June. According to an official from an auto financier company, "What was only 10 to 15% as cash purchases actually rose to almost 40% for select Maruti models, which just goes to show that buyers are vary of interest rates in loans".
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| Auto Financiers Increased Interest Rates By 75 bps |
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