Chennai : In a move some believe can impact the impressive growth witnessed in car sales, lenders have raised interest rates by anything between 50 basis points and 100 bps (100 bps = 1%). Notably, the rates have touched the double digit mark after a long gap.

Dealer sources said all private lenders had affected the hike last week. "The increase differs for every model. For instance, rack rate on loans for a B segment (compact car) will now be 12% while a C segment (sedan) would be charged 11.5% for loans ranging from three to five years. Except for PSU banks, almost all lenders, including Kotak, ICICI and HDFC, have informed us about the hike," a dealer said.

"We have increased loan rates for both new and used cars. Our net rate to customer would range between 10.5% and 11.25%, depending on the tenure and model," said Sumit Bali, CEO of Kotak Car Insurance.

Though some dealers believe the rate hike might dampen sales, manufacturers maintain that the current hike would be absorbed by the market. "The growth momentum is strong and this hike may not impact sales. However, another hike might spook sentiments and potentially dampen new car sales," P Balendran, vice-president, General Motors, said.