New Delhi: Auto loan segment witnessed quite a beating after the current hike in interest rates and the auto manufacturer were actively lobbying to get the banks to reduce interest rates on auto loans. Finance Minister Mr. P Chidambram called on the bans to offer auto loans at more competitive terms to revive the market and set the pace rolling.
Bank of India became the latest bank to respond to this call. It has slashed its interest rate on vehicle loans by 0.25 percent. New auto loan seeker can now avail such loans at a reduced interest rates of 11.75 percent. Women will get special interest concession of 0.25 percent on auto loans.
However, this cut is limited to short term loans, auto loans with longer repayment period will still come at 12 percent interest rate. BoI in a move to further spice up its offer has also reduced the processing charge on such loans and is willing to provide accidental insurance cover at competitive rates during the current festive season.
The call of Finance Minister saw many public and private sector bank's reduce their interest rates. ICICI Bank in a move to tackle the recent slump introduced a floating rate auto loan concept in the market. SBI also reduced its interest rates on various loans by 50 to 200 basis points. While all these banks have offered the benefits of reduced rates to new loan seekers Axis bank moved a step further and have extended the interest rate cut benefit to its existing customers also.
Bank of India offers auto loans through its scheme Star Autofin. The Scheme provides loan for purchasing 2 or 4 wheeler vehicles (like car, scooter, motorcycle etc.). Maximum amount of loan is Rs. 25 lakhs, depending upon cost of vehicle & income of applicant.