CHENNAI, Feb 2: The recent three to four per cent spurt in interest rates has forced Telco to abandon its most daring experiment in cheap finance. The company has closed its five per cent flat finance scheme with effect from from January 31, a month after it was launched.Sources from Tata Finance, through which the scheme was routed, said about 700 vehicles were financed under the offer throughout India. Though Telco officials said the response to the scheme was good, the company has found it unviable to continue it as the economy is heading back to a high interest rate regime.However, Telco officials do not concede this openly. ``We had decided to keep the scheme open only till January 31 at the time of the launch itself,'' they maintained.The five per cent flat interest translates into an eight per cent rate on a diminishing value basis. This is an eight to nine per cent discount on the prevailing market rates of around 16-17 per cent. Industry sources now expect truck financing rates to go up by``a minimum of two to three per cent.''``Even banks have been forced to increase car and other vehicle finance rates. There is no way that Telco can keep the scheme going,'' industry sources said. Telco, it is learnt, had considered extending the scheme only for the LPT range, but decided against it because of the upswing in interest rates.Telco's dealers too said the scheme was ``reasonably successful'' but had some reservations. ``As there was no significant increase in freight offerings, the cheap finance did not create fresh demand. Only commited purchases were routed through the scheme,'' some dealers said.
