Car Loan Rates Intimidate New Car Buyers

With car loan rates hitting around 17%, many new car buyers have chosen not to purchase new cars for fear of paying those high interest rates. You can see the impact it is having on the car loan and car sales industry, as their numbers in both industries have been steadily dropping. They still have people coming in to look at cars, but once they get their car loan paperwork they leave without signing as they do not want to pay those rates.

They have seen an increase in the number of cash sales over the past two months, but a decrease in car loans. The problem is that most people cannot afford to purchase a car with cash, so the auto industry is seeing a decline in overall purchases.

With interest rates running 17% over the last few weeks, and the fact that they have been running at 16% for 24 months and 15% for 36 months, the new car loan numbers have been dropping. They say it is in relation to the interest rates for retail segments which have been increasing as well.

Just this week, ICICI Bank has cut its car loan rate at 50 basis points to try and bring in more auto loan business. They say that since customers are aware that auto loan rates were lower just months ago, many are planning on waiting to see if they drop again before they buy.

Some car manufacturers and dealers have been trying to offer discounts to customers as well, in an attempt to increase business, and many think that in the long run that will go a long way to increasing car loan business. They say that around the end of March and beginning of April their business starts to pick up as well, so this is a normal slump; it just happens to be lower than usual.

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