CHENNAI: For many, the first car is always has a great emotional value. The rising interest rates, which has hurt car buyers is just one side of the story. The other side which is making a four wheeler buy a real stretch is the margin money which needs to be brought in upfront. Private sector banks have quietly hiked the margin requirement by 10 percentage points in the past few weeks.
A few dealers said that it was becoming increasingly difficult to get a car loan through. For a compact car (B Segment), lenders now demand 10% to 15% as margin money which was earlier only 5% or so. For a mid sized sedan (C-Segment car), the margin money requirement has been hiked to 20% from 10% and for a utility vehicle it is now 25% from the earlier 15%.
Commercial banks however lend up to 85% of on road price (dealer price plus road tax and insurance). "The problem here is paper work consumes a week to 10 days," dealers said.
In simple words, what this means for a car buyer is that he should shell out Rs 60,000 upfront for a compact car as against Rs 20,000 earlier and increases correspondingly for bigger cars. Till recently, car financiers used to finance upto 100% of on road price of car.
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