Facing stiff competition from its banking peers, several non-banking finance companies have revised interest rates on consumer vechicle financing by 100-200 basis points.
Mahindra Finance, a subsidiary of Mahindra & Mahindra Limited, lowered the interest rates by between 100 and 200 basis points - "We have reduced interest rates between 100 and 200 basis points from May-end to June. Earlier our rates were 14-15 per cent. Now they are 12.50-13 per cent. Our own ability to raise money has been quite good," confirmed Mr Ramesh Iyer, Managing Director, Mahindra Finance.
Other vehicle financing companies have been taking similar steps by providing advances under lower interest schemes or availing cash pay back options (subjected to conditions which vary from company to company).
Quoting an official at Tata Motors Finance dealership, "We are running a scheme under which we give back customer 2 per cent of the disbursed loan amount back if there is no default on a single equated monthly instalment in the past three years. On four years, the cash-back is 2.5 per cent and five years 3 per cent."
In a statement, Ravi Todi, Joint Managing Director, Magma Fincorp, indicated increased competition and changes in interest rates in relation to it in a statement- "Car financing is difficult as competition from public sector banks is increasing. Our rates are now between 12 and 14 per cent."
Bajaj Auto Finance offering an interest subvention of 6 percent on XCD motorbikes. The company launched a scheme of 10 percent rate on some other models, including Pulsar 150 and 180 cc for almost two months, in April this year. Milind Bade, General Manager, Marketing of the company reveled, "We come out with select schemes on certain products. It helps to pre-pone sales and a competitive rate acts as an enabler."