While the market is anticipating tightening of interest rates, some banks are actually cutting rates to make their loan books bigger. Two leading private sector banks, Axis Bank Ltd and ICICI Bank Ltd, have announced a reduction in interest rates on their auto loans.
Axis Bank reduced its interest rates on car loans by 50- 75 basis points (bps) for loans for terms between three and five years. The offer is for its new customers only. While earlier the rates were in the range of 10.75-11%, the new rates have been brought down to 10- 10.50%. “Based on customer research and interactions as well as market feedback, we feel that this is the appropriate time to offer new rates to new customers,” said Manju Srivatsa, president (retail banking), Axis Bank.
ICICI Bank has also cut interest rates on car loans by 25-50 bps. An ICICI Bank spokesperson said, “The bank has reduced interest rates on car loans and is now at 9.5%-11.5%, depending on the category and tenure of loans.”
Most banks are waiting for the Reserve Bank of India’s quarterly review of its annual monetary policy due on 29 January to revise interest rates. Looks like it will be a good time to buy a car then—you will get lower rates as well as the benefit of a 2010 registration and, of course, the depreciation benefits if you use the car for business purposes.