Auto loan rates to rise 50-100 bps this week
Following the CRR and repo rate hike by RBI, top auto financiers have decided to raise interest rates on loans. Tips for car buyers | Mazda MotoNari RX
By ET Bureau |
NEW DELHI: OUCH! Buying a new car will get costlier from this week. Following the CRR and repo rate hike by RBI, top auto financiers have decided to raise interest rates on loans. This is the third rate hike so far this year. According to car dealers, the top trio of ICICI Bank, HDFC Bank and Kotak have all lined up 50-100 basis point hikes from July 1.
���We have decided to effect a 75-100 bps hike from July 1,��� said Kotak Mahindra Prime CEO Sumit Bali. ICICI officials said the hike will be announced on June 30, but declined to reveal the amount. HDFC Bank is planning a 50-bps hike. ���We effected a 25-bps hike in June and this is our second increase. We have no choice. I see auto demand across segments dropping by 15-20%,��� said HDFC Bank EVP & head (auto loans) Ashok Khanna.
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Interest rates for small cars is 13.5-14.5% while for mid-sized models it is 12.75-13.5%. Financiers said a 100-bps hike pushes up the EMI of a three-year, Rs 4-lakh loan by Rs 50 per lakh or Rs 200 per month. That works out to around Rs 2,500 a year. But given that this is the third hike, the combined pinch will be around Rs 600 per month, or Rs 7,000 a year. Over four years, it adds up to Rs 28,000-30,000 even for a mass mid-segment car.
Car financiers have undertaken at least one hike (in some cases two) this year. In April, all financiers went in for a 75-100 bps increase. Some followed it up with another hike in May-June.
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