I think we now know why Maruti’s low cost car was revealed to the banks earlier this month, they were probably pitching it to the banks to see if they would grant loans for people who want to buy it!
Banks in India are saying that they would only grant loans to buy the Tata Nano to second time car buyers instead of motorcycle owners who are looking to upgrade to a car. “We will not look to finance the purchase of the Tata Nano for those who already own a motorcycle but are stretching their budgets to buy a car. We have faced numerous problems of motorcycle loan defaults,” said an unnamed banker in an interview with Business Standard in Mumbai.
Rates to finance the Tata Nano are also expected to be higher at 18 to 19% instead of a usual new car interest rate of 13 to 14%, although it is still lower than the usual used car interest rate of 22%. This is because usually low income owners that buy such cars usually have their finances stretched to the limits every month, especially in the wake of astronomical fuel prices. This is also why Proton cars usually have higher interest rates than foreign makes in Malaysia.