Posted Thu, 01/06/2011 - 17:33 by CarDekho Team
For all the car buyers if December kept your enthusiasm alive for purchasing your favourite car, this year will disappoint you. Firstly the car prises across segment in India would rise by 1 to 3 per cent and the EMIs will get steeper due to combination of cost factor present in the auto industry.
Due to the latest financial liquidity barrier, the car loans from ICICI Bank and Kotak Mahindra Prime are geared up from 25 bps to 50 bps (100 bps = 1 per cent). HDFC Bank has thought to keep the interest rate as its present but is taking back the discounts by increasing the rack rates from 25 to 100 bps.
The car loans typically follow the home loan interest rates and the top financial institutions are talking hikes. Sumit Bali, the Chief Executive Senior of Kotak Mahindra Prime said that in the coming two day's time, the company would declare a hike and it is expected to be around 50 basis points. He said that the hike will be more than 50 bps, the company took in the last month. This will result in the company's rack rates from 11.75 to 13 per cent.
ICICI Bank, the another finance biggie has also made the decision to hike rates and is still working towards the quantum. If looking at another important player HDFC Bank it has made a decision of taking away the discounts it offers.
Ashok Khanna, the Senior Executive Vice-President and Business Head Auto Loans foe HDFC Bank said that the company currently have discounts upto 25 to 100 bps which will be halted now. This will be resulting in the rack rates which will be 10.5 to 11.75 per cent for a time period of 36 months.
Financiers though are looking forward for another hike in rates in the coming 4-6 weeks time due to the liquidity crunch. As per the auto financiers 50 bps rise will increase the monthly EMI by Rs 25 per lakh for 36 month time period. For instance, if the buyer is purchasing Hyundai i10 Magna for Rs 4.2 lakh and the loan is for Rs 3 lakh, the amount increase will by Rs 75 every month or Rs 900 per year. So for the next three years the buyer will pay Rs 2,700 more. For a car loan having a time period of 48 months, it will be Rs 60 every month or Rs 720 every year and for next four year loans Rs 2,880. As per a car loan for 24 months for the similar car the excess amount will be Rs 90 every month or Rs 1,080 every year.