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You’ll finally have to pay less on car loans!

You’ll finally have to pay less on car loans!

Snapshot: Raghu Ram Rajan surprised everyone with huge cuts in the rate of interest just before Diwali. Read how the Auto Industry will be impacted.

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Looks like the festive season this year has started a little early for aspiring car buyers. The rate cuts (steepest in three years) announced by the RBI will impact the car sales this festive season which begins October 13. A five-year loan for Rs. 5 lakh will save you about Rs. 7,000 over payment tenure. The impact on EMIs, however minimal will help spur sales to some extent and this is being seen as a positive move in the Auto Industry.

Rakesh Srivastava, senior VP (Sales and Marketing) at HMIL (Hyundai Motors India Limited) said “Reduction in interest rates will lower EMIs, thus bringing down the cost of ownership. This festival gift of rate cut will assure growth.”

According to certain industry officials, lowering interest rates for home loans will also be another positive factor that will boost auto sales indirectly. The reduction in interest rates for home loans puts more disposable income in the hands of customers and they spend it on items such as cars / bikes etc.

Sumit Bali, senior executive VP(Retail Assets) at Kotak Mahindra Bank said “Our interest rates on car loans have already been reduced by 25 basis points this year and we are currently at 9.75%.”

At present, about 65% of car sales come via Finance route and with change in interest rates, this share is expected to rise. Mr R S Kalsi (Executive Director and Sale & Marketing in-charge, Maruti Suzuki India) added, “The market has so far been moving very slowly but with this rate cut, the sentiments will improve. It gives the much-needed boost in the pre-festive season).

From the two-wheeler industry, Pawan Munjal (MD & Chairman, Hero MotoCorp) said "It has come at an opportune time as it will help in raising customer sentiment during the festival season".

Source: TOI

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