With the Indian banking sector hinting that interest rates on auto loans may see an increase in October or November, auto companies are looking at possible steps to maintain high sales figures. At present, interest rates on passenger car loans range from 11 per cent to 12.5 per cent, while interest rates on commercial vehicle loans range from 11-13 per cent. It is expected that interest rates will go up by at least 50-100 basis points in the next 2-3 months. However, most banks are unlikely to take the step before or during the festive season. Sales during the festive season will possibly be used as a barometer to decide the quantum of increase in interest rates. Auto companies are planning to offset the effects of the increased rates by offering heavy discounts on car models, special financing schemes and arrangements with different banks.
