ICICI Bank, SBI Increase Hike Home Loan, Car Loan Rates

It was recently we published the news about majore banks going for a Hike in Interest Rates and Loan Rates, and today the two big major players in the Home Loan and Car Loan market have increased their PLR's or Prime lending rates which will ultimately lead to an increase in the interest rates to be paid on the various loans take by borrowers.
So the constumers of these loans will be hit majorly, as the hike will increase their EMI or monthly payments This means that the loans will now cost higher and it will hit the end customers with more money required for repayments.
By what rate are the loan interest rates increased by ICICI Bank and State Bank of India?
It is reported that the hike in Loan interest rates indicator i.e. PLR or Prime Lending Rate is 50 basis points or 0.5%

This is the era of rising loan rates, so some banks have also increased their deposit rates significantly. HDFC Bank recently sent out an email to all its customers about increased deposit rates and SBI is also reported to have increased the depopsit rates.
SBI is also learnt to come out with a floating rate deposit scheme, so as to attract investors.

By which date will the revised loan rates be effective by SBI & ICICI Bank?
It is reported that the new revised loan rates are getting effective from 18th August.

All this is credited to the RBI increasing the CRR on 27th July. It was almost certain that rates will go up.

Is it the right time to buy a house on home loan?
I dont think so. The rates are rising, then may rise even further. The rumors in the market is that it is the time for rising interest rates. We all know how well the banks do when the rates increase - they are very quick to pass on the increased rates to the loan borrowers. However, when the rates decrease, no bank promptly reduces the EMI. So it is the customer who get stuck.
Think twice before going for a long term committment like a home loan spanning over many long years. You may see that ou take a home loan at 8.5% today, and after 3 months the rate increases to 9% increasing your EMI. Some banks may offer teaser rates fixed for some initial period of time, but that's something varies from bank to bank. Even that might be increased if the interest rates increase.

It is also learnt that both the existing and the new loan borrowers will get affected because of this loan rate increase.
Individual loan seekers should practice caution before making long term long committments

National Bank Increased Mortgage Home Loan Rates: Newzealand

The increase in loan rates is going all around the world. Although US Fed kept the rates unchanged yesterday, but in Newzealand, the interest rates are being raised consistently by many banks. Yesterday, the National Bank in Newzealand became the latest bank to increase the loan rates for mortgages and home loans. This means that the loans will now cost higher and it will hit the end customers with more money required for repayments.
By what rate are the loan interest rates increased by National Bank Newzealand?
It is reported that the hike in interest rates for both variable and flexi rate is increased by 0.25% or 25 basis points.
The new variable rate is now at 6.24% while the flexi rate is 6.20%

However, it is rpeorted that National Bank's the home loan rate for 18 month fixed term is decreased by 19 basis points or 0.19% to 6.60%.
The 2 year loan rate is down 0.14% or 14 basis points and is now at 6.85%.
The 3 year loan rate is down by 0.1% or 10 basis points to 7.15%

By which date will the revised loan rates be effective by National Bank?
It is reported that the new revised loan rates are getting effective from 11th August.

Any other banks in Newzealand raising the interest rates for loans?
Yes, previously it was TSB, ANZ, Kiwibank, ASB and Westpac banks which have already changed their loan rates.

All these developments are hitting the common men really hard. Higher cost of living, uncertain job conditions and limited sources of income are making it a real problem for common man to survive

Bank Hike Loan Rates, Interest rates on Home & Car Loans: Higher EMI Payments

There comes the big news which everyone was afraid of - The largest players in the home loan and car loan markets have gone for a Home Loan Rate Hike and Car Loan Rate Hike, even the education loan is not spared, the Education Loan Interest Rate is hiked. This is another big blow to the customers of loans in India, as the rate hike will really pinch them hard.
By what rate are the loan interest rates increased?
It is reported that the hike in interest rates for various loans is upto 0.75% or 75 basis points. It will mean that the customers who have opted for any kinds of loans will now have to shell out extra money while making EMI payments.

Any example of how much extra EMI will need to be paid for the increased loan interest rates ?
Although the interest rate increase will be varying from bank to bank and depending upon the type of loan, but here is an example.
If someone has taken a home loan of 20 lac for a period of 10 years at 9% interest rate will usually pay an EMI of around 25350.
However, if the interest rate on home loan is increased by 0.75% to 9.75%, then the EMI will increase to around 26,200. That is, clear hike of 850 Rs. or so.

Which banks have increased the loan interest rates ?
The news is about the benchmark prime lending rate (BPLR) increase.
PNB or Punjab National Bank, which is the second largest national bank of India, has increased BPLR by 75 basis points to 11.75%.
Corporation Bank , Bank of Baroda and Oriental Bank of Commerce have gone for 0.5% rate hike and now their BPLR stands at 12.50 per cent. IDBI increased BPLR is now at 13.25%, while Union Bank's is at 12.25%. Both have increased it by 50 bps.

The interesting thing is about the major players in the home loan market. State Bank or India (SBI), ICICI Bank and HDFC bank have not yet ome out with any info on hiked loan rates. These are the major players in the Indian Home loan and car loan market. However, it is expected that these banks will sooner or later increase their loan rates. Infact, HDFC bank has already increased the interest rates payable on Fixed Deposits. So it can anytime announce a hike in loan rates.

What is the reason for this increase in loan intrest rates?
The reason is said to be the CRR hike by Reserve Bank of India (RBI), which was declared on 27th July. Exxpectations are that there might be another rate hike by RBI anytime, as the inflation is still not under control. There is another monetary review expected on September 16th.

All these developments are hitting the common men really hard. Higher EMI's higher cost of living, uncertain job conditions and limited sources of income are making it a real problem for common man to survive

ICICI, HDFC, Kotak, Axis Bank Hike Loan Rate: Increase rates on Home & Car Loans

There comes the big news which everyone was afraid of - The largest players in the home loan and car loan markets have gone for a Home Loan Rate Hike and Car Loan Rate Hike. This comes as another big hit for the retail customers who are looking for a respite from the rising inflation costs, high cost of living in metro and other issues. The budget has already put a load on the consumers in terms for fuel price hike, then there is a proposal to charge 10.3% service tax if someone is booking a uner constructed flat or apartment. Now, the rate hike by the leading banks, who are big players in the home loan and car loan markets have added more problems for the end customers.

Axis bank was the first one in the list, which stopped its attractive discount home loan offer of 8.25% fixed for 2 years, even before the budget. Now, ICICI Bank and HDFC Bank have also joined the babndwagon by increasing the home loan rates and car loan rates.
The reason being quoted is the stand by RBI - it increased the cash reserve ratio by 75 basis points which led to this change. This also had the effect on bond market, the 10 year benchmark bond has risen around 12 bp since budget was announced.

By what rates have auto loans or car loans increased?
The auto loans or car loans have been increased between 0.5% to 1% and it varies from Bank to Bank.

By what rates have House loans or Home loans increased?
The home loans have gone by by 50 basis points.

The banks are quoting the reason that they have offered high rates on the deposits schemes by as much as 75 basis points and they are trying to justify it by saying that loan rates should get correlated with the high deposit rates.

Which Banks have increased the loan rates?
Multiple Banks - ICICI Bank, HDFC Bank, Kotak Mahindra Bank, Axis Bank,

ANy other banks which are still offering cheaper home loan rates?
Yes - the budget was good for the nationalized banks - so again Banks like SBI, PNB, Bank of Maharashtra are offering the discounted rates. However, the problem is that these banks take atleast 45 days to process the applications, leaving less choice for the customers as bookings of the flat should be made in a hurry, and that is where the customer is forced to approach the private banks.
Union bank & Cancara Bank have wqithdrawn their discounted home loan schemes.

Tata Nano Car Loan: It's going to be costly

The world's most eagerly awaited car, Tata Nano, is set to be introduced in the market on the coming March 23rd. Not just India, the entire world is eagerly waiting the People's Car. I happen to visit US recently, and while going from the airport to the hotel, I got into conversation with the cab driver who happened to be from Africa. He mentioned that even in his country infact the entire African continent, they are eagerly awiaiting for Nano, as a fuel efficient, high performing, small family car.

Now that is something that proves how a small car has created ripples across the globe. After so much ho-hum, protest in West bengal and shift to Gujarat, the Nano will finally be rolled out. Many Indians are waiting to book the car as soon as it is avaiable. But is it going to be easy? Let's see some of the news as reported on various sources.

What is the booking procedure for Tata Nano Car
Well. That may be a surprise for most. The Tata Nano Car will have to be booked by filling a form! Yes - like you do for an exam. And the form will cost you 300 Rs. This is the first time ever an automobile or car is going to be booked through a form that too with a payable amount. However, if the Tata Nano Car is not allotted to you, then your 300 bucks will be refunded. It is not clear whether the 300 Rs. be given back or adjusted to your total car price if you are allotted one.

What are the variants of Tata Nano Car?
The Tata Nano Car is to be introduced in 3 variants - Basic, CX and LX and the price and facilities will increase in that order. Basic one will have only non-metallic colors, while other 2 high end models will have more variety of colors. Then comes other things like AC, etc. There is no music system provided in any version, but there are slots made available, so one can buy seperately and get it fitted. Body coloured bumbers are available only in the top end model.

What is the Car loan scheme for Tata Nano Car
That's where it gets worse for individuals looking for a real cheap economic small car. The house loan is NOT going to be cheap. You will end up paying much more if you buy Tata Nano Car on Car Loan. As per the recent news on CNBC, State Bank of India is offering Tata Nano Car Loan at a high interest rate as compared to Car loans for other cars. The car loan usually ranges with interest rates 12-13% but for Tata Nano Car, it is a whopping 14.5 to 14.75%. That's right, the Tata Nano Car loan interest rate from SBI may range from 14% to 14.75%.

What is the interest rate for Tata Nano Car Loan?
What is much worse is that these 14% to 14.75% interest rates are the expected rates from PSU or Government Banks. The Tata Nano car loan interest rates from other private banks are expected to be 2-3% higher than this, i.e. it may be in the range of 16%-18%.

So interest rates are higher. How much will this Tata Nano Car loan cost me?
Assuming you take a 5 year car loan for Tata Nano Car, then as per CNBC, the interest you pay may be in excess of 30,000 Rs. So the Tata Nano Car will really become coslty if you go at that interest rate.
Then, that's not all. You will not get the usual 80-85% of the car price as loan. For Tata Nano Car, the car loan is available only at 70% level. That in a way is good beacuse you will take less loan amount. But bad if you dont have money to pay from your own pocket.
So, the small economical people's car Tata Nano will be really economical and cheap only if bought on cash, not on car loan

Buying Car on Loan: Margin Money increased

Few weeks back, we has reported that for Auto Loan Car Loan: Interest Rates will be decided by Credit Profile. Now, people who were happy to thrive on loans for buying the luxuries of life on loan will find that getting a Car Loan or Auto Loan has become more demanding and more difficult.

The reasons are many.
First, the interest rates has risen significantly. Though Car Loan Auto loan interest rate is comparitevely cheaper, beacuse the car itself is used as a collateral, but it is a luxury or accessory which depreciates in value as the time goes by. So, the high rates of interest have hit the car buyers on loan significantly.

Second, the credit profile or Credit Rating of an individual will be deciding the interest rates which you need to pay. That again is subjective and depends on the loan offering organization.

Third, there is a requirement for margin money -this is the margin money which needs to be brought in upfront. The bad news is that major loan offering players like the Private sector banks have quietly hiked the margin requirement by as much as 10 percentage in the past few weeks.

What this means, say if you want to buy a mid-size luxury car which may cost somewhere like 500,000. So apart from the loans, you are required to put in some money upfront from your side. Some weeks back, it used to be only 5% and now it has gone up to 15% or 20% by some banks. It means that if for a 500,000 Rs. car, initially you were required to pay only 25,000 as margin money from your side and rest through the loan. But now you will be required to pay 75000 or even 100,000 as margin money, so your loan amount available to you will be less.

Why is this happening
Well, banks are running for cover due to the global economic turmoil. They are running short of cash. The interest rates have increased so banks need to keep a lot more money as reserve with the central banks of the respective country. Hence, there is a problem of liquidity in the market and therefore not much money is available. So the banks are expecting the loan borrowers to shell out more money from their side and take loans of smaller amounts. However, these loans are offered at high interest rates.

TOI had an article in last few days, where it mentioned that "for a car buyer is that he should shell out 60,000 upfront for a compact car as against 20,000 earlier and increases correspondingly for bigger cars. Till recently, car financiers used to finance upto 100% of on road price of car.
"This is not all. In most cases, car financiers have brought in tighter disbursal norms, making a purchase a Herculean task. I know of a case in Coimbatore, where a buyer was asked to show property in his name to avail of a loan for a small car. And more so, after all paper work, the lender disbursed only 85% of the car value," sources said. A section of market feels that rising interest rates actually don’t hurt sales that much. A 50 basis points or half per cent increase on a one lakh rupee car loan for a tenure of three years would translate into a monthly of a mere Rs 36, they say.

Auto Loan Car Loan: Interest Rates decided by Credit Profile

So you decided to go for your dream car or SUV or a two-wheeler but you do not have sufficient money to purchase your dream vehicle. What do you do? Basically, nothing!
Just give a call to any of the Banks and the auto loan representative will come running to your home and do all the needful for you. What you need to provide him is your latest salary slip or offer letter and copies of some other formal documents – that’s it. The process is so smooth and easy.

However, what is it that worries the auto loan or car loan borrowers – it’s the interest rate charged to them. In last few months, we have seen a huge fluctuations in the interest rates. The interest rates in India are going up, causing a problem for loan borrowers. But fortunately, there is some respite for loan borrowers – those borrowers who have a good credit profile.

It’s no longer true that banks (especially private banks) treat one and every customer in the same way. The same applies to the interest rate that is charged to the customers – it varies from bank to bank and within the same bank it varies from customer to customer, depending upon their credit profile.

Apart from that, the banks or financial companies also decide the auto loan interest rate based upon your salary, financial situation (cash-inflow and expenses), residential status, residential locality, previous and existing loans and their repayment, etc.

For example, ICICI bank car loan or ICICI Bank auto loan has the biggest difference in terms of loans offered for two wheeler purchase. They even put the interest rates higher in branches where there have been more defaulters in the past.

Other loan providers like Fullertron also decide loan rate based upon the fact that whether your are married, staying alone or with family, employment history, etc.

The case of two wheeler loans is unique. Big government banks like PNB, SBI, etc. are not very aggressive when offering two wheeler loans. The reason being that two wheelers are usually purchased on loan by people from lower income groups and hence the default rate is high. Secondly, the amount of loan for two wheeler is less, hence, banks cannot earn good profit on loan repayment.

On the other hands, almost all the banks are quite aggressively marketing their car loan or 4 wheeler auto loan campaigns, including SBI, PNB, ICICI, HDFC, etc. The reason being that car loans require considerably big amount, and people from usually better income groups and a middle to high profile candidates opt for car loans.
All in all, it is important to maintain a good credit profile.

The CBI or Credit Bureau of India, is collecting data from all the banks in India. So if you default on a loan taken from one bank, it will not be easy for you to get another loan from other bank as the checks are now in place.

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