Car loans to increase by 13 per cent
Auto market is one of the fastest growing industry in India. The auto industry will now witness a hike in the interest rates of the car loan. This hike has been implemented effective February 3, 2011. The top auto loan providers like HDFC ad Kotak Mahindra are also planning to implement the increased interest rates which might go above 13 %.
Confirming the news the Ashok Khanna, senior executive vice-president, HDFC Bank said that they will be increasing the interest rates by 50 bsp in response to the latest hike in rates by RBI. On the other hand Sumit Bali, CEO, Kotak Mahindra Prime, mentioned that the bank has also decided to increase the interest rates by 50 bsp.
The effect of the hike on the loan amount would vary depending on the time period of loan along with the amount of the loan. For the most common of loan period like 36 months , there would a hike of just Rs. 25 per lakh or Rs.1200 a year for small cars costing around 4 lakhs. In case of mid size sedan the increase in the total interest rate for 36 month loan period comes up to Rs. 1800. The EMI weighs more on loans for smaller cars like i10 where interest rates go up as against a loan for a luxury car like Mercedes C Class
As mentioned above the rates vary depending on the period of the loan and the models. The interest rates available on cars costing 20 lakhs or above are comparatively economical. Having said that, the 36-60 month loan tenure carries the least expensive rates.
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