Reserve Bank of India has announced that for the next quarter they will be increasing repo rate by 40 basis points. The organization took this decision to tame growing inflation in the country. This will make the loans expensive, mainly vehicle loans will be more expensive than home loans.
Interest rates on vehicles have always been higher in comparison to home and educational loans. Hence, people plan more in advance to buy a vehicle than they do in the case of owning a home or planning abroad education. Since August 2018, this is the first time that RBI has decided to increase the repo rate and automobile industry trackers are worried post this move.
Some of the financial experts are expressing their major concern regarding the recent increase and are predicting further dip in sales. While commercial vehicles like big trucks, vans have seen recovery in sales post the pandemic, passenger vehicles and domestic cars have yet to see such recovery.
Still, major number of Indians are yet to recover from the financial doldrums created by the pandemic and world is fearing another recession like in 2008. During this time, if loans get expensive, that too vehicle loans, people who are planning to expand their business on small scale might have to think twice pushing automobile industry into difficulties. All we can say is, let’s plan and exercise financial discipline in coming days.