The leading passenger car manufacturer in India, Maruti Suzuki, has tied up with Syndicate Bank for giving car loans at reduced rates, reports have claimed. In a bid to expand its clientele, Maruti Suzuki and Syndicate Bank will be seen extending car loans to prospective car buyers. Speaking at the occasion, General Manager of Syndicate Bank, Preetham Lal, said, “This is being done to boost our car loan portfolio.”
As a result of the pact between the two, Syndicate Bank has decided to slash the rate of interest on Maruti Suzuki's cars to 10.25 per cent, which at present stands at 10.4 per cent. Apart from this, the bank has also lowered the processing charges on car loans by 50 per cent in order to lure buyers towards financing scheme. Reportedly, the auto loan taken on any Maruti Suzuki vehicle can be repaid in 84 months. Furthermore, Syndicate Bank is offering an option in which buyers can get a loan on the vehicle of up to 95 per cent of the actual on-road price without having any guarantor. As announced by the bank, the offer is valid till 15th January, 2014.
These offers introduced by banks are not new as the current year is coming to an end. Generally, at the end of the year, car manufacturers aim to clear out the existing stock of their vehicles as the demand is quite low during this phase. This is due to the fact that if one purchases the vehicle during the end of any year, it has a high potential of giving out less resale value, which prompts certain buyers to wait for next year. So with the low demand and huge pile-up of stock, almost every company starts giving away several leverages and additional freebies on purchase of any car.
Meanwhile, the pressure generated by automobile bodies on banks to cut the rate of interest on new cars has bore some fruit in the recent months. During the last month, State Bank of India (SBI) reduced interest rates on car loans and also lowered the processing charges keeping in mind the business of festive season. Although, the margin was less but still it gave many car consumers a huge respite. The interest rate on car loan was slashed by 0.20 per cent to 10.55 per cent as opposed to the previous 10.75 per cent. Also, the processing charges were brought down from 0.51 per cent of the loan amount with a minimum of Rs. 1020 to a flat rate of Rs. 500.
