Car buyers will have to go through another round of price hike. Earlier it was hike in car prices, then fuel hike and this time it is the car loan. All the banks and top financial corporations have increased the interest rates for car loan. This decision was taken due to the increase in RBI’s lending rates. The revised rates will pinch all the existing as well as new borrowers of car loans.
O. P. Bhatt, Chairman and Managing Director, State Bank of India has declared that the bank has decided to raise the interest rate by 0.5 per cent on all loans including home loans and auto loans which are related to PLR (Prime Lending Rate).
This is the third hike that has hit this year. Kotak Mahindra Prime has decided to affect 75-100 basis point hike (bph), HDFC Bank had increased 25bph in June this year and with this second hike, the auto demand across the segments will drop by 15-20%. In 2005-06 the auto interest rate was 9 percent and now it is likely to go up to 14-14.5% from 13%.