Golden Days for Car Buyers are on Cards

by : addi vardhaman

As people succeed in life and achieve new milestones, they reward themselves with better things and a quality life. Buying a car is one such thing that enables people to keep pace with the fast moving and highly tasking professional world . It is not necessary that a prospective buyer must have the entire amount to fund the car in his pocket. Based on certain conditions, banks in India are now willing extend loan to finance the major share of the car's cost. Getting the dream car is now very easy as the interest rate is also cut by many banks.

In order to make the car loan deal more lucrative,in march 2008, State Bank of Bikaner and Jaipur, an associate of State Bank of India has reduced its interest rates by 1-1.5 % on car loans taken by state government employees. This finance facility is also available to the employees of major corporate houses. The new decreased interest rates are applicable on loans will be charged from first march 2008. For car loans of more than 7 lakh and a repayment period of 3 years, the interest rates have been slashed to 12% a year as compared to benchmark prime lending rate (PLR) of 13% for last year. For loans of less than 7 lakh with a repayment period of 3 years, there has been a 1.5% reduction in the payable interest rate.

If the repayment period of more than 3 years, the bank has reduced the rate of interest by 1% to 12% per annum. Keeping pace with the industry trend of decreasing interest rates, SBI has also reduced its interest rates by 0.25% on other loans also. The Finance Minister has recently advised the public sector banks to reduce its interest rates car loans and follow the example of SBI.

The car financing sector of Indian economy will be benefited a lot if there will be an uniform rate cut by different banks. This will not only give birth to a healthy competition, but also will increase the car sales in India. Apart from this, the banks should adopt different innovative strategies to attract the prospective imported car buyers. Though, these buyers constitute a smaller section, yet the habit of replacing the existing model for a new stylish one is more intense. In order to tap the unbound profit prospectives in this short segment, private banks like ICICI are now thinking seriously. Whatever may be the outcome, it can be told without any doubt that prospective car buyers are going to have golden days.