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Top Auto Finance Companies in India

Indian auto market has more than 35 financers that offer auto financing solutions to the intended car buyers. Being one of the fastest growing automobile markets in the world, the Indian automobile market has got so much of potential and hence a number of auto finance companies have come up to tap the booming market. It can be added here that the passenger vehicle market constitutes almost 80% of automobile sales. In 2008, the stock passenger car was about 11 per 1,000 people. The production of passenger vehicle is further expected to go up at a CAGR of about 10% from 2009-10 to 2012-13. So, sensing this market potential, many financial companies in India have given special attention on auto financing. During the 2000s, the auto finance in India was dominated by private banks, when Citibank was the market leader. But its market share dropped from 27 per cent during 90s to less than 8 percent during early 2000. ICICI Bank became the new leader with almost 29.2 per cent market share during 2003-04. The journey continued till 2008 when HDFC bank took the lead. However, the current trend shows that the PSU banks like SBI, PNB, Bank of Baroda, Bank of India, Canara Bank, Syndicate Bank and Union Bank etc. are leaving behind their private sector counterparts in the `22,000 crore passenger car and 2-wheeler loan market. The reason behind this is the fact that, private banks have been compelled to reduce their exposure to the sector owing to increased delinquencies.

List of Top Auto Finance Companies in India

Following is the list of top auto finance companies in India:

State Bank of India

State Bank of India (SBI) is one of the leaders in the auto finance segments in India. Recently it has slashed down its rate of interest for the new cars, which, in turn, has attracted a number of customers. Its long repayment option and extensive network of more than 12,150 branches have also made it quite popular among the customers. Recently SBI has inked a deal with General Motors for car finance. In 2008-09, SBI registered a net profit of ` 9,121 crore, which was 35.55% bigger than the last financial year's profit of ` 6,729 crore.

ICICI Bank

ICICI Bank was the market leader in auto finance in India till 2008. Though currently not on the top, it still remains amongst the top 10 auto finance companies in India. However, to regain its lost reign, ICICI Bank is putting car loans on fast track. In the current financial year, ICICI Bank has doubled auto loan disbursement amount to more than 1,500 crore, comparing to the last financial year (ended March 2009). ICICI Bank registered a net income of ` 35,769.5 million in the last financial year (ended March 31, 2009).

HDFC Bank

HDFC Bank is a market leader in auto finance in India. In order to stay in the race of dominating Indian auto finance market, HDFC Bank also cut down the rate of interest for its car loan. In the financial year 2008-09, HDFC Bank registered a profit of ` 2,444,93 lacs, comparing to ` 1,590,18 in the previous financial year.

Bajaj Auto Finance Limited (BAFL)

Bajaj Auto Finance Ltd is one of the leading auto finance companies in India. Offering a diverse array of financial products to its clients ranging from two wheeler loans to other loans like consumer durable loans, business loans and many more, BAFL also offers free personal accident insurance to its clients. It has an extensive network of 50 branch offices and more than 6000 consumer durable dealerships. In the financially year 2008-09, BAFL registered a profit (after taxation) of `339.1 million, comparing to previous year's profit of ` 201.2 billion.

Citibank Once a market leader in auto financing in India, Citibank offers automobile financing to its clients through its extensive dealership network across the country. One of the leading players in the market, Citibank offers a range of auto financing options for the customers. For the year ended March 31, 2009, Citibank registered a net profit (after tax) of ` 2,173 crore, which was 20% higher than its previous year's profit of ` 1,804 crore.

Bank of Baroda

Bank of Baroda offers specially-designed car loans for the customers so that it meets their demands, status and taste. Loans are offered for new as well as used cars. Bank of Baroda also offers a unique facility for installation of CNG/LPG Gas-kit in the cars. Unique features and low interest rates are USPs of Bank of Baroda car loans. In 2008-09, Bank of Baroda registered a net profit of 2,227.20 crore, comparing to the net profit of ` 1,435.52 crore in the previous financial year.

Punjab National Bank

Punjab National Bank, a renowned leader in the field of auto finance market in India, offers auto loan for new as well as old vehicles of not older than 3 years. Loans are also offered for purchase of vehicles of

foreign/indigenous makes. In September 2009, PNB tied up with Mahindra and Mahindra for financing their vehicles across the nation. PNB registered a net profit of ` 3,090,88 lacs in the year ended March 31, 2009.

Kotak Mahindra Prime Limited (KMPL)

Kotak Car Finance has crafted a niche in the Indian auto finance market through its flexible schemes, hasslefree documentation and quick processing. KMPL finances new as well as used cars. In 2008-09, KMPL registered a net profit (after tax) of ` 1,570 million.

Sundaram Auto Finance

Sundaram Auto Finance is one of the market leaders in the auto finance market in India. Founded in 1998, this company extends finance in all models of cars. Customers can choose from a range of vehicle and finance packages offered by the company. It also has an extensive network of more than 400 branches across the nation. Sundaram finance registered a consolidated net profit of `15073.14 lakhs in 2008-09.

United Bank of India

United Bank of India is one of the leading auto finance companies in India offering range of car financing options to the customers. It offers car loan for new cars as well as for used cars. In 2008-09, UBI registered a net profit of ` 18470.96 lakhs.

Canara Bank

Canara Bank offers attractive interest in the auto loans for its customers. From August 2009, Canara Bank further reduced its auto loan rates to woo customers. Canara Bank registered a net profit of `2072 crore in 2008-09, which saw a 32.4% rise from previous year's net profit of ` 1565 crore.

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CURRENT MARKET SCENARIO


PSU banks dominate the auto loan market
By Vaibhav Aggarwal Feb 13, 2009

The Public sector banks in the industry have been active in the car financing and regaining their space in the auto loan market. They seem to overtaken their private peers that have walked out from the auto lending due to the increased delinquencies. On the other hand the PSU banks have responded to the RBI's signal to lower interest rates and thereby captured a large share in the finance portfolio of most auto makers in the industry. Amongst the public that have been aggressively disbursing auto loans, the largest lender SBI takes a lead. The others following the leader are Bank of India, Punjab National Bank, Bank of Baroda, Canara Bank, Syndicate Bank and Union Bank of India. These banks are jointly lending around Rs 1,000 crore every month against the private banks that comprise a total auto lending of nearly Rs 800 crore. Maruti Suzuki, executive officer (marketing and sales), Mayank Pareek said that recently the PSU banks are actively taking part in auto financing. "Against the perception that they are slow in processing applications, the PSU banks have vastly improved quality of their services which today are no less than private sector banks," he added. PSU banks hold 70% share in the financed car sales of Maruti and the remaining 30% are financed by private banks. "This used to be the opposite if you look at market share position in fiscal 2006-07," said Pareek. Hyundai India's senior VP (marketing and sales), Arvind Saxena agreed with the view of Pareek and said, "PSU banks have been very active in the market and off late, their share in our financed car sales has surpassed that of private sector banks." Ankush Arora, VP (sales and marketing) of GM India, also told that the PSU banks have been more competitive in the market and their share in the financed car sales of GM have increased to 45%. "It is growing, and that too rapidly," said Arora. The PSU banks are extending loans mainly in the range up to Rs 3 lakh for small cars like Alto, WagonR, Santo and Indica. At the same time these banks are also catering two-wheelers loans. The main reason for an increase in the auto loan portfolio of the PSU banks is the falling auto loan rates relative to the interest rates charged by the private banks. "On an average, the interest rates of PSU banks are lower by 1-1.5%," said Pareek and Arora.

Besides the wide reach of the PSU banks is also a major factor behind the success of these banks. "Much of the growth in car sales is coming from smaller regions of the country and here the PSU banks enjoy a good penetration. Also, they have good profiling of customers who may be associated with the banks for years," said Pareek.

PSU banks dominate the auto loan market


By Vaibhav Aggarwal Feb 13, 2009

Moreover the private banks have been reluctant in their lending as a fear of increasing defaults. This has given an edge to the public banks that are extending auto loans in the range of 12.5% to 13.5%. A company official said, "Private sector banks have been going slow and are not very eager to offer car loans." ICICI Bank that was the market leader in auto loans space till early 2008 has drastically reduced lending. ICICI's Head vehicle finance N R Narayanan said, "We have decreased our exposure in the market and now our total loan size is now reduced to around Rs 500 crore annually. We have a large portfolio of the auto vehicles already financed in the past and are focusing on managing it."

A year ago the auto loan market was dominated by the private banks with a combined market share of 75-80%.

Owing to the presence of various conglomerates and private sector banks in India, funding a car has now become very trouble-free and effortless task. To benefit from its growing popularity, all banks are endorsing their products competitively in the market. Their products are customized with novel service offerings and subsidies. A comprehensive, flexible and modified financing alternative for the purchase of new cars are accessible throughout the nation. The best car finance scheme is the one that provides the lowest rate of interest and extended loan tenure.

However, the best deal should not be estimated by solely considering EMI amounts, rather how much is entirely forfeited by you in the total loan term should be taken into consideration.

Characteristics of Car Finance



Banks reimburse upto 90% of the rate of the new car and 85% of the rate of the used car. Normally public sector banks provide lower interest rates compared to the non-banking funding firms The interest rate in Car finance is estimated on a monthly basis The banks provide refund term of 12 to 60 months. Some banks even provide 7 years of refund term For a salaried individual, banks offer loan up to 3 times of his yearly income. For a self employed person, banks offer loan up to 6 times of his yearly income.

Car Finance offered by various Banks in India:


Name of the Bank ICICI Bank IDBI Bank Reliance Consumer Finance ABN Amro Eligibility in terms of yearly income (Rs in Lakhs) 12 15 12 15 12 15 12 15 Rate of Interest 9.0-13.0 EMI in Processing Rs charges Prepayment costs 5% on primary sum prepaid DNA 1% on primary sum prepaid, eligible after 30 months 4% on primary sum prepaid NA NIL 1% on primary sum prepaid 2% on primary sum prepaid NIL

7,466 - Rs 2500 to Rs 8,048 5000 8.5 - 9.19 7,394 Rs.2500 9.5 15.0 12.0 11.5 11.5 11.25 10.75 10.5-11.0 10.5 10.5 10.0 10.5-11.0 11.0 7,537 8,349 7,900 7,827 7,827 7,790 7,717 DNA NIL NIL 0.50% of the entire finance amount Rs 134 to Rs 168 0.50% of the entire finance amount Rs 500

Syndicate Bank 10 United Bank of 12 - 15 India Indian 12 - 15 Overseas Bank SBI Oriental Bank of Commerce Kotak Bank 15 10 12 - 15

7,681 - 3% of the entire 7,754 finance amount 7,681 7,681 7,609

Allahabad Bank 10 HDFC Bank Tata Capital 18 12 - 15

5.75% of primary sum outstanding 2% of primary sum NIL outstanding Rs 1600 to Rs 5% of primary sum 3000 outstanding 0.5% of the entire 5% of primary sum finance amount outstanding

Punjab 12.5 National Bank Canara Bank 12 - 15

7,681 Rs 4000 NIL 7,754 0.1% of the entire 7,754 DNA finance amount

Car Finance EMI Calculation:

EMI to be Name of the paid in 1st Bank year 26,235 ICICI Bank 26,795 IDBI Bank 26,166 Reliance Consumer 26,235 Finance ABN Amro 27,077 Syndicate 26,235 Bank United Bank of 26,514 India Indian 26,585 Overseas Bank SBI 26,549 Oriental Bank 26,410 of Commerce 26,445 Kotak Bank 26,514 Allahabad 26,445 Bank HDFC Bank 26,445 Tata Capital 26,375 Punjab 26,445 National Bank 26,514 Canara Bank 26,514

EMI to be paid in 2nd year 13,705 14,263 13,637 13,705 14,546 13,705 13,982 14,052 14,017 13,878 13,913 13,982 13,913 13,913 13,843 13,913 13,982 13,982

EMI to be paid in 3rd year 9,540 10,108 9,470 9,540 10,400 9,540 9,822 9,893 9,857 9,715 9,751 9,822 9,751 9,751 9,680 9,751 9,822 9,822

EMI to be paid in 4th year 7,466 8,048 7,394 7,537 8,349 7,466 7,827 7,827 7,790 7,717 7,681 7,754 7,681 7,681 7,609 7,681 7,754 7,754

EMI to be paid in 5th year 6,228 6,826 6,155 6,337 7,137 6,228 6,598 6,598 6,560 6,485 6,448 6,523 6,448 6,448 6,374 6,448 6,523 6,523

EMI to be EMI to be paid in paid in 6th year 7th year 5,520 5,408 5,787 5,787 5,672 5,634 5,634 5,710 5,710 4,942 5,216 5,097 5,058 5,058 5,137 -

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