HDFC Bank might up auto loans interest rates by 0.50%

HDFC Bank, is likely to raise its car loan interest rates by 0.50 per cent in the next 7-10 days.

"Borrowing rates have gone up, we are likely to raise our rates (auto loans) by 0.50 per cent in the next 7-10 days," told HDFC Bank's S. Exe V-P, Ashok Khanna.

Another private sector lender, Kotak Mahindra Bank, is also feeling the pressure to raise its auto lending rates, one of its senior officials said. "There is a pressure to raise our interest rates on vehicle loans but we have not yet taken a decision on it," Kotak Mahindra Bank's Head of Consumer Banking, K V S Manian, said.

With deposit rates going up, there is a possibility of a 0.50 per cent hike in car loan interest rates, he said, emphasising, however, that the bank has not yet taken a decision on the matter.

Its auto loan rates range between 9.5 per cent to 10.25 per cent, Manian said. HDFC Bank said that the market is a position to "comfortably absorb" the hike in lending rates. "By the year-end, there is even a possibility of rates going up by 1 per cent," he added.

The bank's average auto loans interest rates are in the range of 9.5 per cent (for D-premium category) to 11 per cent (A-category), he said. "There is a huge supply shortage and as new models come into the market, demand (for cars) will escalate," Khanna said.

The lender's car-loans disbursement per month is around Rs 1,400-crore while for the entire universe of vehicle financing, it stands at around Rs 2,000-crore per month, he said.