ICICI Bank introduces floating rate car loan

High interest rates on auto finance have impacted auto sales and consequently, the consumer finance sector.

Some banks have started offering floating interest rate car loans to entice more people to buy cars.

ICICI Bank, State Bank of India and Punjab National Bank and Kolkata-based Magnum Finance offer auto loans on floating rates, based on customer feedback and persistent demand from car companies.

ICICI Bank has started offering floating rate car loans from September 1, 2007. Floating rate loans are priced 50 basis points lower than fixed rate loans.

The introduction of floating rate for car loans is expected to expand the auto loan market by 5 per cent in the next two-three months.

The current interest rates on auto loans is around 14 per cent, which has meant flat car sales for the first five months of this financial year. The average interest rates last year on auto loans were 8-9 per cent.