Tata Nano loans to be expensiveThinking of taking a loan to finance the Tata Nano, be ready to be treated as a buyer of second-hand car
Apnaloan.com Research Bureau
20 Jun 2008
Thinking of taking a loan to finance the Tata Nano, be ready to be treated as a buyer of second-hand car.
This is because the Rs1 lakh price tag is potentially making it more of a risky proposition for some lenders, who anticipate a rush of less well-off applicants.
Financiers plan to squeeze out more from buyers of the Tata Nano because the customer risk profile of loan applicants is likely to straddle between those who finance two-wheelers (typically higher risk) and those who buy new cars.
Several leading auto loan financiers are already saying that typical loan applicants for the Tata Nano might be people with lower incomes, thus putting them in the category of used car buyers, for whom lending rates are higher.
As a result, it is likely that loan applicants may have to pay annual interest rates of 17 per cent-18 per cent. Banks currently charge around 14.5 per cent for new cars.
Bankers are yet to decide on what proportion of the vehicle cost they will finance. Only 75 per cent of a car's cost in India is financed by lenders now, compared to 90 per cent a couple of years ago, because rising lending rates and inflation are making financiers less confident on whether consumers will be able to repay loans on time.