Some banks have rolled back interest rates to facilitate buyers to go for new cars. The auto industry has witnessed a decline in new car sales in the last year and the trend seems to be continuing this year too. The State Bank of India has come forward to tackle this issue and help buyers to purchase their priced asset without additional financial burden.
The State Bank of Bikaner and Jaipur have reduced interest rates by 1–1.5 percent on car loans for the state government employees. The new interest rates are applicable for all loans availed since March 1. The 1–1.5 percent reduction in interest rates can be availed for those who have borrowed less than Rs 7 lakh. Such loans are usually taken by small car and entry level sedan buyers. For those who have borrowed more than Rs 7 lakh with a 3 year duration, the interest rates have been cut down to 12 percent. The usual benchmark for the banks, so far, has been 13 percent.
For those who have availed loans for duration more than three years, the banks have reduced interest rates by 1 percent. With this reduction the fixed interest rates now stands at 12 percent. The new interest rate was implemented after the suggestion by Finance Minister to reduce interest rates on consumer goods so as to increase the affordability of these commodities among large section of people.
Several other public sector banks are expected to slash rates. However, the rising cost of cars is burning hole in pockets of consumers. Car companies have resorted to hike product prices since April, following a brief respite after budget concession of 4 percent.