The Tata Nano that is soon going to launch is all set to get its financers but at a higher cost. Almost every lender that is ready to finance the Nano is charging hefty prices from the prospective buyers.
In fact the country's largest lender, State Bank of India (SBI) that has entered into an agreement with the Tata Motors for financing the Nano is putting final touches to the scheme. The bank has decided to charge as high as 14-14.75% for tenure of up to five years. Moreover it will only finance 70% of the vehicle price.
Last week senior executives of Tata Motors had a meeting with the General Managers of SBI branches to decide on the method of launching the scheme and bank branches that will roll out the scheme. The company had more focus on the rural locations and small towns as demand is expected to be high from these areas.
The terms and conditions for the Nano loan are stricter than the normal loan schemes extended by the both public and private sector banks. Presently the car loan rates offered by the PSU banks range around 11.5-12% where those of private sector banks vary from 12% to 14.5%.
Also the car price that is financed by the banks is mostly 85% but in case of Nano it is much lower.
Answering about the available finance schemes for the Nano, a spokesperson from Tata Motors said, "The booking process and other details will be announced on March 23, 2009. In any case, we have said on February 26, 2009, that Tata Motors is making arrangements for the widest possible network to book the car, so that prospective customers can conveniently avail of booking facilities at their locations, across the length and breadth of India. Your information on interest rates etc is purely speculative."
As per the market sources, Tata will roll out around 100,000 cars in the first year. This is because it is confined by the number of cars that can be rolled out from assembly lines in Pune (Maharashtra) and Pant Nagar (Uttarakhand). Unless the main plant in Gujarat starts operations in October, the company will limit the number of cars that will come out.
Moreover the limited number of cars will also increase the chances of selling the car at a premium in the black market. However a Tata Motors dealer said: "Cars will be allotted to buyers by random computer sampling, which the company will do, and cars will be delivered in the name of the buyer to us. The chances of black marketing are not possible in such a case."
The entry level model of the Nano will cost Rs 1 lakh excluding freight and value-added tax and the other models with air conditioner are expected to be priced Rs 25,000 to Rs 30,000 higher.