Car companies offering low interest rates to support petrol car sales

Recent updates in Indian car market suggest that car manufacturing companies are trying hard to allure consumers with cheaper finance options so as to amplify sales figures of their petrol cars which are suffering from dilemma after the hike in petrol prices this May.

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According to relevant sources, interest rates on car loans are currently floating at 12.5%, while petrol cars are enjoying a rebate of 2 percent. Moreover, global car makers like Volkswagen and Honda Siel have been trying to attract consumers with a special interest rate of 6.99 percent. Volkswagen Financial Services which is Volkswagen's car financing department has been offering loans at 6.99 percent interest rate on Volkswagen Vento petrol.

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Director, Volkswagen Sales India, Neeraj Garg said that company is offering lower interest rate on Volkswagen Vento petrol variant so as to balance the higher cost of ownership. He further added that after two weeks the scheme has attracted large number of costumers towards company’s dealerships across the country.Walking on the footsteps of Volkswagen, Honda Siel is also offering similar interest rates on its popular Honda City sedan and hatchback segment car Honda Jazz. It is worth mentioning that Honda Motors is experiencing low sales figures due to consumers drifting towards diesel cars and issues in the supply of spare parts.

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Besides Volkswagen Vento and Honda City cars, other petrol version cars which are available with high price tag are Ford Figo, Mercedes CGI and Volkswagen Polo.It is worth mentioning that interest rates offered by private banks and financial institutions have not been altered, but the low interest rate offered by financing companies owned by carmakers is going to start a rate war in long run.

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Chief executive officer of Kotak Mahindra Prime, Sumit Bali said that due to sudden dip in car sales, big names like Maruti Suzuki, Hyundai and Tata Motors have already started offering financial support on their car models so as to boost the sales figures. Furthermore, luxury car manufacturer is also publicizing the products to amplify the sales of its petrol model cars.

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