Mumbai Residents Have Money To Burn on Auto Loans

Some residents of Mumbai have found that lately they have more of a disposable income than every before, and they are trying to find places of putting that money. Some are buying bigger and better homes, but some are putting their money into auto loans. The rate of auto loans being processed has greatly increased lately, so many are trying to figure out what would be the best auto loan for them/

Ravi Narayanan, the head of commercial vehicle and auto loans for ICICI Bank says that last year they had 85% of their cars purchased paid for by auto loan. This year they have seen a small dip in auto loans of about 10%, but they do not expect that to hold for long. Narayanan says that they expect that once the festival season starts the number of auto loans will increase.

Some consumers are finding different ways to finance those cars however, instead of going for a standard auto loan. They are going for what is called a “top-up” loan instead of the regular car loan. The way it works is that if you have a mortgage and you have paid on it for one or two years, you can ask the bank to take the loan back to the original amount and give you the difference in between. They are then taking those loans to pay for their cars instead of the standard auto loan.

The interest rate on the loan is higher than a regular mortgage, but it is lower than what they have been offering on auto loans. For some people it works very well and they walk away without the added debt of the car loan. However, the EMI’s do not usually get spread across the rest of the loan, and if you cannot make a bigger prepayment to bring the principal down you might find that you are unable to lower your payments at all. There is also the danger of paying the loan all the way out, in which case you will ultimately be paying for the car long after you have even owned it anymore.

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