Auto Loan rates down by 0.25%

The country's largest bank, State Bank of India, has slashed auto loan rates & deposit rates, while many others including Kotak Mahindra Bank, Bank of Baroda and Deutsche Bank have cut their benchmark base rates.

State Bank of India has slashed car loan rates by 0.25% (25 basis points) to 11.25%. This makes SBI the cheapest lender for car loans. Currently, HDFC Bank offers car loans at rates between 11.50-12.25%, while ICICI Bank rates range between 11.50-14.75%.

At present, about 70% of Indian car purchases are made via the financing route. Since SBI is the largest auto loan provider with a 16% market share, its move to cut auto loan rates by 0.25% will be mirrored by other banks soon. Although the move will stimulate car sales, the effect will be small and not immediate as the rate cut is very small. Additionally, the interest on deposits have also gone down by between 0.25-1%. 

This move comes after the Reserve Bank of India (RBI) cut the repo rate by 50 basis points (0.50%). The repo rate is the rate at which the RBI lends money to commercial banks.