Car loans to cost more in Feb

The interest rates by Reserve Bank of India (RBI) has been revised recently and according to the new norms, auto loans will become expensive soon. The top loan providers for automobile in India encircles State Bank of India (SBI), HDFC and Kotak Mahindra Prime, might come up with a hike of 50 basis point in the month of Feb 2011. the 5 basis point is equivalent to the hike of .5 per cent.

Addressing the issue, Mr. Ashok Khanna who is the senior executive vice-president and business head auto loans in HDFC Bank commented that for now the company will not introduce a rise in the auto loan rates and the decision will be active for all those customers which are in pipeline to get the  loans as per company’s commitment. He also said that is any changes are introduced which should come in action from Feb 2011, the company will consider it and accordingly raise the price.

For now, the non govt. financing institutions like HDFC and ICICI offer car loan at 10-14% rate. Whereas the Govt based financing institutions like SBI, Bank of Baroda and Punjab National Bank offer 8.5-12% rates on car loan. For now no prominent effect will be seen on the accelerating demand in auto market.

Read More on : Fiat 500 price in India