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The latest news regarding car loans is about the interest rates and the influence of the bearish stock market on the car purchasing capabilities of the prospective customers.
For most of the businessmen the stock market is the barometer of progress. In fact when the market is bullish every one is happy and when the market is bearish every one seems to run for cover. The months of October 2008 and November 2008 have witnessed a turbulent and speculative market. The Sensex and the Nifty have come down drastically. Money seems to have evaporated from the market. Recession and pessimism seems to have gripped the corporate world. In these kinds of circumstances hardly would there be any one who would like to buy a car. Among the prospective car buyers most of the buyers would like to buy the car on loan rather than opt for cash. It is sure that the bearish market would be adversely affecting the market of car loans.
Now that most of the money in the market seems to have evaporated from the market, only those people are left who have saved enough money to maintain their standard of living. The recent trend of economy has compelled the loan lenders to hike their rate of interest. There is a dual effect of this hike in the rate of interest. The first effect is that most of borrowers will be discouraged from availing the loan services and the second effect is that only those customers who can pay the mentioned rate of interest will avail the loan services. Thus, the overall car loan market is going to be filtered by hiking the rate of interest.
Most of the banks, keeping into consideration the present market scenario and trend have increased the margin money. Margin money is also called the deposit money which the borrower has to pay to the bank or seller before the bank releases the rest of the money. When the margin money increases the people with meager sum get segregated and are not eligible to get the loan. Usually this strategy is resorted to when the bank wants to be on the safer side.
There are some banks that tie up with the car manufacturer. This is usually a win-win situation for both because the business of the bank as well as the manufacturer increases and the customers are facilitated with ease of the documentation that is required to avail the loan.
The market of used cars is growing at a rapid pace. The development of this market is dependent on the primary buyers who want to sell off the cars because either they cannot maintain it or they are facing bankruptcy. Earlier the banks used to not approve car loans for used cars but now the banks also know that if they are not going to approve it, the private lender is going to make a profit. Nowadays, the banks have started giving car loans for used cars too.
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