Car loans for HDFC Bank and Kotak Mahindra Prime are likely to rise following the increase in prime lending rates (PLR) by the banks.

A senior executive of HDFC Bank said that the bank may be raising the car loan rates by 50 basis points in the coming few days. "The rates need to climb because cost of deposits has already been increased across the industry," said Ashok Khanna, HDFC Bank's senior executive vice president and business head for vehicle loans.

"Demand is very robust and waiting periods for cars is on the rise. A 50 bps hike in rates is not going to affect demand," Khanna added.

The bank is currently standing as the largest player in the vehicle finance space.

Kotak Mahindra Prime is also going to raise the rates of car loans from next week by 50 basis points. The NBFC currently gives car loans at 9.5 to 10.25%.

Axis Bank would also revise its car loan rates on Monday, said a senior executive of the bank.

"There are a number of reasons why the market for auto loans is doing well. The auto industry is doing well and penetration of car finance among customers is also picking up. Another factor is that the ticket size of loans is also increasing," said Sumit Bali, chief executive officer of Kotak Mahindra Capital.