The third largest private sector bank in India, Axis bank has cut down interest rates on car loans by around 150-200 basis points (1.5-2 percentage points) in the last one month in some southern markets.
The bank is providing loan at a very competitive rate of 9% across all car models in Bangalore, Hyderabad and Chennai and the rates are valid till the end of this month. It has also done away with the processing fees.
In the former half of the year, SBI had slashed rates to 8% for the first year and 10% for the next two years. For the remaining tenure of the loans, customers have to pay 25-75 basis points below the bank's prime lending rate (PLR). Unlike SBI, Axis bank offers fixed rate for the entire tenure of the loan.
The rate card of Axis bank for the internal customers ranges from 9.5-10% while for external customers it is between 10.5-11%. However the final rate for the customer depends on the commission the dealer passes on the customers since dealers pass on a part of their commission to the customer, ranging between 2-2.5%, to earn higher business volumes. This results in lower interest rates for the customers.
According to industry sources, bank's direct sales agents are offering rates as low as 8% for select dealers in these locations. The bank, however, denies this.
Bank of Rajasthan has entered into a strategic partnership with Hyundai motors to offer more competitive car loan rates.