Mumbai, Mar 12: With the current financial year drawing to a close, auto-finance companies have begun receiving a large number of applications for loans. The demand is expected to further increase during the last two weeks of the financial year.Buyers, who can avail of depreciation benefits for income-tax purposes, have started jumping to the various schemes being offered by auto-financiers.
Finance firms, on their part, are leaving no stone unturned in their bid to sell auto-loan schemes. From free music systems to zero-interest loans, finance firms are throwing in a whole lot of freebies to woo customers.
Bank of America is offering auto loans at zero interest for the first 30 days on loans availed on or before March 31 for the purchase of the Maruti 800, Zen and Esteem. Maruti Countrywide has gone a step further by offering a music system worth Rs 34,000 free on the purchase of a Maruti Esteem. The buyer also has the option of availing of a Rs 3.5-lakh zero per cent 12-month loan.
Corporates, which normally rush for auto-loan schemes during the last month of the financial year, have shied away this time. "The general sluggishness in the economy during 1997-98 has contributed to this development," the head of an auto-finance company said. "Cost-cutting is another factor that has contributed to corporates not opting for the finance schemes being offered by us," he added.
"Corporates account for hardly 10-15 per cent of the auto-loan disbursements so it will not impact the growth in demand in any way," said Dipak Gupta, chief executive officer of Kotak Mahindra Primus Ltd. "The demand for auto loans in March has certainly been higher than the last two months," he added.
While some auto-financiers have reported a marginal increase in disbursements during March as compared with the other months, there has been an overall slump in disbursements compared to March 1997.
"It is mostly individuals who have responded to the various finance schemes being offered by firms," a senior executive with a non-banking finance company said. The auto-finance industry, which witnessed a growth rate of 25-30 per cent during the last two years, is expected to grow by just 9 per cent during the current year. A number of finance companies which have relatively low exposures in auto-finance have been selling their portfolios to larger players in the industry.
A number of banks like the State Bank of India and the Bank of India have shown interest in picking up auto-loan portfolios from non-banking finance companies. The bigger NBFCs like Ashok Leyland Finance and Kotak Mahindra Primus are also looking at expanding their portfolios through bought-out deals.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
