What will the car loan interest rates look like in 2005?Unlike home loans, the rate of interest applicable to a customer is a function of many elements. Here, the effective customer rate is an outcome of subsidies in the form of manufacturer subvention, dealer margin and finance subvention. Hence the net effect depends on these elements as well. At any given point in time, there are various schemes being offered and based on these, the net customer rate is arrived at. However, through a composite mix of these elements, leading financiers like us are able to offer good deals to customers by working out the best possible combinations of the above. Going ahead, we feel the interest rates should remain stable as of now. Are there any new products or innovations expected in 2005 in the car finance sector?I see several new products on offer in 2005. These are: Car Overdraft: ICICI Bank has already launched the Car Overdraft product in 2004 and it is going to be a focus area in the year 2005. The overdraft facility is provided in the form of an ICICI Bank Roaming Current Account (with an overdraft limit). An overdraft account is opened for the customer with a pre-approved limit set up. This limit depends on the vintage and condition of the car, which is valued before setting up the limit. Once this limit is set up, the customers can then withdraw money from ATMs or use their debit cards at various merchant establishments as per his requirement. The customer pays interest only on the amount withdrawn by him from the account for the period it is withdrawn for. He also has the flexibility of repaying a minimum of 5 per cent of the total outstanding every month, very similar to the facility available on credit cards repayment. The car overdraft facility is like providing mixed benefits of a personal loan, credit card, car loan, as also the regular benefits of a roaming current account. Loan on Phone: This is a unique offer to some of our customers who have been given a pre-approved car loan based on their existing relationship. The customer can simply contact our call centre to find out if he/she has a pre-approved loan. On getting a confirmation he can walk into any dealership or contact our channel partner and take the car by completing minimal documentation. Used cars loans: These are expected to get more aggressive. With better control on process of transactions on used cars — highlighted by entry of organised players and showroom price tags, this is expected to lead to more financing on used cars. The availability of used cars loans is now expected to reach much beyond the current reach and into the C category smaller townships across India. Refinance and top-up loans are also being offered for not just ICICI Bank customers, but even customers with repayments from other financiers.
