Reasonable loans, aggressive options from public sector banks,s and a general disinclination to utilize the cash for purchasing of cars have steered to an increase in auto financing penetration in passenger driven vehicles from 75% at the opening of 2020 to improve around 80% by now.
The dealers and auto financers say that the modern buzz is steered by the aggression of PSU lenders, which are proposing lower rates than financiers from the private sector. Nonetheless, the boost is constrained only to passenger driven vehicles and not the two-wheelers or any vehicles used for commercial purpose. baRavi Narayanan, who is the bank head of ICICI said that In addition to various acceptable factors affecting macroeconomics and the all-time low-interest rate is the one main element for boosted penetration in terms of car finance as it improves the sale of passenger cars. Moreover, there is substantial growth in the demand for used cars for personal mobility. This too is leading to more customers, who are now opting for a vehicle finance.
An M Karthik who is the head for the financial sector rating for agency Icra’s also said there has been a normal drop by 100-120bps which is more or less 1% in car loan lending rates between January and December 2020. And customers are not only receiving loans very cheaply but also a better quality of service as well. PSU banks, which are delivering car loans at sub-8% right now and have witnessed a sharp rise in their loan books. Indian Bank saw an improvement of 90% in loans sanctioned and avail of in the third quarter as referred to in the first half of this fiscal. The hike happened in October with around 40% of vehicles financed in the mid-segment with the average loan amount not being more than Rs 5 lakh.