Car loan demand soar with repo rates slashed by RBI
By Vaibhav Aggarwal
Apr 18, 2012
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Banking and monetary regulator Reserve Bank of India has announced a surprise drop in repo rates yesterday by as much as 50 bps.

Although, the impact of this drop on EMIs cannot be ascertained as of now, the rate cut received a positive response from car companies.

"Indian customers are emotional in nature and will see a rate cut as a positive move. This should spur spending," said Neeraj Garg, Director at Volkswagen Cars.

Continous rate surges had hit customer sentiments hard especially in a country where car buying is majorly done via financing. The rate cut is definitely going to come as a relief to the customer.

According to a banker, in case the entire 50 bps slash in rates is passed on to the EMIs paid by customer on his loans, then his EMI for a car worth Rs 4-5 lakh would see a Rs 100 drop.

"The pass-on should happen very quickly... hopefully by the end of this week," said Sumit Bali, VP at Kotak Mahindra Bank.


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