The arrival of the new fiscal year brings in new policies and new hopes towards a better future. The increase in the funding rates by the leading banks from 0.10% to 0.20% has made it easier for customers to go in for car loan. The Marginal Cost of funds based Lending Rate (MCLR) introduced by the RBI helps to keep the lending rates fixed, and are revised by them at the end of each year. MCLR refers to the minimum interest rate of a bank below which it cannot lend, except in some cases allowed by the RBI. It is an internal benchmark or reference rate for the bank. For commercial banks that prefer to continue with the old base rate regime, the RBI has decided to link the base rate with the MCLR from the next fiscal year. All this helps the customer to consider his buying potential and his ability to take a loan.
Another factor that has come in favour of the customer is the new cryptocurrency Bitcoin. Finance Minister Arun Jaitley in his Union Budget speech mentioned that Bitcoin is not an illegal or unfair means of money transfer in any way. Truebil, a Mumbai based used car dealer has started using this mode of money transfer for its car sale. This is done through Unocoin, a website which is a partner of the start-up. This is where one can deposit the amount of the car purchase which in turn will deposit the money to Truebil’s account completing the transaction. Unocoin does not charge its customers or the start-up for this payment process.
Amidst all these positives that help a customer to go in for a car loan, there’s one negative - the insurance rate on cars that keeps on increasing year after year. The IRDAI (Insurance Regulatory and Development Authority of India) has proposed to decrease the premium on insurance of small cars. For private cars whose engine capacity does not exceed 1000cc, the regulator has proposed to decrease the premium to INR.1,850 for 2018-19, from INR. 2,055 in 2017-18. This reduction is not applicable to commercial vehicles, for which the current insurance rate may increase. This decrease in insurance rates is only for certain third-party insurance of passenger cars. Vintage car owners can avail of a 50% drop in insurance but only for the cars which are certified ‘vintage’ by the Vintage and Classic Car Club.
So, for those looking forward to taking a loan to get their favorite vehicle, this is the right time to go ahead and do so with easy loan facilities in place.