High Interest Car Loans

With the increasing car loan interest rates, auto finance companies have been feeling the brunt of them. They used to be considered a great place to put your money, but with the new trend of increase car loan rates they have become somewhat unappealing to most customers. You are seeing major players in the auto loan industry, like Maruti Udyog and Bajaj Auto, falling below their normal stock performances.

However, with major players feeling the brunt, you also have the smaller ones like Shriram Transport Finance and Bajaj Auto Finance, who have fallen below normal market operating performances over the last six to twelve months, and are expected to drop even more. They are competing against each other in a rapidly declining auto finance industry.

They are also looking at some intense competition from each other as well as smaller margins, as more and more car buyers choose to pay cash or keep the car they have instead of getting an auto loan at a higher interest rate. They are left with very limited pricing power, as well as higher borrowing costs which are adding to the interest rate crisis.

Experts think that if the current car loan interest rates continue to rise, not only will the margins continue to deteriorate, but borrowing costs will continue to increase. This leaves the dealers and the car loan industry with these added costs as they can only pass so much of it onto the car buyer, or they just won’t buy the car. Experts are finding that putting their money in banking stock instead of auto finance companies is more feasible for them. Their stocks are more affordable, and more attractive than those for auto finance companies.

Back to April Index