Maruti Suzuki, Hyundai and Mercedes Benz are providing Indian auto buyers “teaser loans”, a move that sources stated came after softening of the central bank’s stance because of a coronavirus-induced economic slump.
Although the Reserve Bank of India (RBI) never prohibited teaser loans, which provide low interest rates for a limited period before jumping, its obvious disapproval has kept banks from offering them, bankers stated.
Maruti Suzuki, Hyundai and Daimler’s Mercedes Benz have all teamed up with banks to provide purchase schemes involving teasers.
Maruti Suzuki India was hopeful there would be an increase in demand, company executive Shashank Srivastava said, adding that consumers had shown a clear desire for “flexible financing”.
Martin Schwenk, CEO of Mercedes-Benz India, stated the schemes would help in “reinstilling customer confidence”.
Hyundai and the RBI have not made any comments yet.
The RBI has earlier said the terms on such loans are not transparent.
Five banking sources stated lenders and automakers agreed that promotional teaser loans were require to recover sales, which automakers say could drop as much as 45% this fiscal year.
“People will require some easier terms due to COVID-19 and thereafter they can pay higher,” one of three sources knowledgeable of the RBI’S change in position stated.