Get ready to pay more for your cars from the next fiscal as lenders are likely to raise rates on auto loans after the latest round of interest rate tightening by the RBI.
Lenders such as HDFC, Kotak Mahindra Prime and ICICI Bank will take a call on hiking the rates next month. "A final decision will be taken from April on-wards as we want to finish our pipeline of our cases for March, before altering future interest charges ," a senior executive ofHDFC Bank said.
Private banks charge rates ranging from 10.5-14-5 %. Public sector banks such as SBI, Punjab & Sind Bank, Canara Bank and Bank of Baroda , which offer lower rate of interest on auto loans in the range of 9.25-12 %, will also hike charges from the next fiscal year.
Strong economic growth and positive consumer sentiments had driven demand in the Indian auto market without impacting growth. Domestic sales grew 30% to 22.72 lakh units in the first 11 months of the fiscal and had absorbed the higher interest rate that rose five times in the current fiscal. "The demand for cars could be impacted if this incessant rise in interest rates reaches the psychological rate of 15% in the coming fiscal. Right now, minor hikes will not impact monthly instalments, but in the long term, it will, " a Delhi-based analyst said.
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