However the bankers have not yet decided on the proportion of car cost that will be financed by them. Earlier the banks use to finance 90% of the vehicle cost but now they are only financing 75% because of the higher risk of default. The current economic slowdown and the global financial turmoil that left many of us jobless have cautioned banks with their lending. Hence Nano aspirants that will mainly comprise of less trustworthy customers will force banks to charge higher interest rate to cover the risk.
The auto-marker had initially tied up with State Bank of India to provide finance for the vehicle. Now it has also signed pact with many other public sector banks that have good rural presence in the country. Tata Motors has resorted to this strategy because it feels that the demand will mop up from that particular group.
At the same time Tata Motors is also weighing options on extending loans through its subsidiary company Tata Motors Finance. However it will continue to seek the aid of its existing financing channels. Meanwhile the car can be booked online and the advantages of buying the car online will include paper work and the issues relating to the accessories with other hidden costs made transparent.
The Tata Nano will provide the opportunity of enjoying the luxury to many people who could aspire to own a car.