Hyundai offers loan on lower rates

Car companies have responded to the high interest rates on consumer loans by offering attractive packages to woo back customers.

First off the block is Hyundai Motor India Limited (HMIL), the second largest car manufacturer, which is offering loans for 8.99 per cent annually for its Santro customers for a three-year period and a maximum amount of Rs 3 lakh. The interest rate, which is nearly half the prevailing market rate, however, is available for only 10 days.

The burden of the lower rate of interest is shared by HMIL, its dealers and the financing bank, with the total outgo per car for the three to be around Rs 30,000. Arvind Saxena, vice-president, marketing & sales HMIL said: "The interest rate on car loans has been on a rising trend. We have found that Santro remains most sensitive to any changes in the cost of ownership. So, we have introduced this scheme to bring down the total cost of owning our smallest car."

Hyundai's main bankers ICICI, HDFC and Kotak are absorbing 1 per cent point of the interest rate which consumers would have to fork out , the rest is being shared by the dealer and the company.

N R Narayanan, head auto finance, ICICI Bank told Business Standard, "The entire scheme is structured in such a way to benefit the customer and take a little share from all the three concerned."