Taking a cue from RBI's rate cut on Tuesday, private sector HDFC Bank has decided to slash auto loan rates by upto 0.5%.
The interest rate on car loan will be lower by 0.25% while two-wheeler loan will be cheaper by 0.5%, a senior bank official confirmed when contacted.
As far as the commercial vehicle segment is concerned, the reduction in rates will be 0.25%.
The new rates would be effective from February 1, the official added.
Last month, the bank had reduced its base rate by 0.1% to 9.7%, the lowest in the market.
At the same time, the benchmark prime lending rate (BPLR) of the bank was also slashed by a similar margin to 18.20%.
The revision in the benchmark lending rate was in anticipation of rate cut by the central bank in its January policy.
On Tuesday, the RBI decided to reduce short-term lending rate by 0.25% and slash Cash Reserve Bank (CRR) by same margin to inject Rs 18,000 crore of liquidity into the system.
Following the announcement by RBI, IDBI Bank reduced both its deposit and lending rates by 0.25% while other banks including State Bank of India (SBI) hinted at cutting their interest rates within next few days.
The Mumbai-based HDFC Bank currently offers car loans between 10.75% and 11.75%. Post rate cut, the range would be 10.5-11.5% for repayment period between 36 and 60 months.
Accordingly, interest rate on two-wheeler loans would be adjusted to between 19.25% to 22.25%.
With regard to commercial vehicles, the rate on heavy commercial vehicle will be down by 0.25% to 11% while light commercial vehicle will get reduced to 13.75% from existing 14%.
The auto loan portfolio of the bank currently stands at about Rs 33,000 crore. The auto loan advances of the bank has been witnessing a growth of 12%.