India's largest bank State Bank of India (SBI) on Monday dealt a good hand to car loan seekers by announcing a 0.25% cut in car loan rates, bringing down the rate of interest to 11.25%.
This makes SBI's car loans cheaper than those offered by HDFC Bank, whose rates range between 11.50% and 12.25% and ICICI Bank, which lends at between 11.50% and 14.75%.
The move is expected to boost car sales in the country, which are already hit by rising interest rates."It is going to be definitely positive for the industry," said Shashank Srivastava, chief general manager, Maruti Suzuki.
"At present, about 70% of the car purchases are through loans. Since SBI is the single-largest auto loan provider with a 16% marketshare, its move to cut auto loan rates by 0.25% will be a big push," he added.
However, analysts said that it may be too soon for auto companies to start celebrating.
"A cut in rates by 0.25% is not much of a relief, though it is definitely a sentiment booster," said Yaresh Kothari, Associate-Automobile, Angel Broking. "It will, however, take time for this rate cut to translate into incremental sales at the ground level for the auto companies, say about four to five months before results start trickling in."