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    HDFC Bank's auto loans to have step-up repayments


    HDFC's step-up repayment feature will reduce installments by 22-25% and bullet repayment feature will enable paying EMIs for only 30-50% of the loan amount.

    One out of every four cars purchased on loan is financed by HDFC Bank, the country's largest auto financier.
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    (This story originally appeared in on Dec 12, 2018)
    MUMBAI: In a bid to expand the auto loan market in the midst of a slowdown, HDFC Bank has introduced a scheme that increases car affordability through step-up repayments and bullet repayments - in which the principal and interest of the loan are paid at one go.

    According to HDFC Bank executives, the step-up repayment feature would reduce installments by 22-25%, while the bullet repayment feature will enable them to pay equated monthly installments (EMIs) for only 30-50% of the loan amount.

    One out of every four cars that is purchased on loan, is financed by HDFC Bank. The country's largest auto financier is facing a slowdown as car sales have taken a hit. Car sales are slower because of five reasons: High fuel prices, availability of cab aggregators in cities, courts making it mandatory to buy three years' insurance upfront and advancement in auto sales in 2017 prior to GST implementation.

    HDFC Bank executive VP (auto loans) Nitish Nagori said, "All top models that have a good resale value, representing 70% of vehicles, are covered under this scheme."

    Cars that are used in the commercial segment or those from manufacturers with a very small market might not get covered, he added. While bullet or balloon repayments are popular auto loan products globally, this is the first time that HDFC Bank is bringing the product to India.

    HDFC Bank is marketing the scheme where a customer can structure the EMI that he is comfortable with for the car of his choice rather than the other way around. The extent of the loan allowed as bullet repayment would depend on the residual value of the car at the end of the loan period.

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