Home, auto loans get cheaper

HDFC Bank lowers vehicle loan rate by 25-50 bps

A day after Reserve Bank of India (RBI) lowered the key policy rate and cut cash reserve ratio by 25 bps each, banks have taken the cue by lowering lending rates.

State Bank of India (SBI)–country’s largest lender has reduced its base rate by 5 bps to 9.7% with effective from 4 February. Base rate is the benchmark rate to which all loan rates are linked with.

Following reduction SBI’s home loan rate for upto Rs 30 lakh loan is now 9.95%. For above Rs 30 lakh, the interest rate will be 10.10%. It also lowered benchmark Prime Lending rate (BPLR) by five basis points to 14.45 per cent

All car loan rates of SBI will be priced at 10.45%.

HDFC Bank–second largest private sector lender–has also reduced its retail lending rate by 25-50 bps. According to a bank official interest rates on car loans and commercial vehicles (CV) are now cheaper by 25 bps while interest on two wheeler loans have been brought down by 50 basis points.

HDFC Bank will charge interest on car loans in the range of 10.5-11.5% while loans for heavy commercial vehicles are now priced at 11%. For light commercial vehicles loans borrower will have to pay the interest of 13.75%.

Those taking loans for two wheelers will have to pay the interest between 19.25-22.25% according to the bank official.

However, HDFC Bank has left its base rate untouched at 9.7%. Since most of HDFC Bank’s retail loans are fixed rate, existing borrowers will not be benefitted from the rate cut.

Old generation private bank, Federal Bank has also cut the interest rate on car loans to flat 10.45% (earlier 11.2-11.7% depending on the tenure) and set up a National Auto Loan Hub, which will ensure speedy processing and turn-around-time of less than a day, said a press release issued by the bank. The hub will function as a single window for processing and sanctioning of auto loans.

Some of the public sector lenders are also expected to take a call on interest rates in the next few days. According to a Central Bank official, the bank’s asset liability will meet tomorrow to take a call on the base rate. Yesterday, IDBI Bank – a state run lender – has reduced their base rate to 10.25%.