New Delhi:- It is not only the car and two-wheeler makers who are trying to lure government employees after a salary revision under the Seventh Pay Commission. Leading banks- SBI, HDFC and Axis- have rolled out attractive car financing schemes for the government employees and pensioners. The highlights include up to 100 per cent financing, lower interest rates and processing charges among other benefits.
Country’s biggest bank, SBI, is doing a 100 per cent financing of on road cost of cars for government employees compared to 90 per cent earlier. The bank’s interest rate for male government employees is now 9.7 per cent and 9.65 per cent for female employees. This is lower than the earlier uniform rate of 9.75 per cent. The foreclosure charge has also been waived.
The move comes after enhanced pay packages under the Seventh Pay Commission came into effect in August this year. Since then, arrears of the preceding months (since January 2016) have also been disbursed. There are 4.8 million central government employees and 5.5 million pensioners, who will benefit from the increase. Car loans form a significant chunk of the retail loan business of banks.
Leading private sector bank, HDFC Bank, too is targeting a larger pie of new car loans taken by government employees. It is offering 90 per cent on road funding options for serving government employees, said a Bank spokesperson. In the past, funding was profile based. Against an earlier processing fee ranging from Rs 2,885 to Rs 5,150 (depending on the quantum of loan), a flat processing fee of Rs 599 is on offer. The interest rate on HDFC car loans is 9.65 per cent. “We are also offering credit shield and insurance funding options in addition to the above,” he added.
Axis Bank, which was earlier funding 85 per cent of the on road cost, is now funding the entire on road cost of cars for government employees. The tenure has also been raised to eight years from seven earlier. It has also sweetened the interest rate to 9.97 per cent from a range of 9.99 to 10.25 per cent earlier. It has also brought down the foreclosure charges.
Top car makers have also announced sops for government employees in recent months. Hyundai is giving benefits of Rs 7,000 on the Grand i10 and Xcent and Rs 5,000 each on the i10 and the Eon, in addition to the other promotional offers for central government employees. Tata Motors announced a scheme for central and state government employees, offering them benefits such as additional cash discounts or the option to buy extended warranty policy, annual maintenance packages as well as accessories on the purchase car. Two-wheeler majors, including Hero MotoCorp and Honda are also offering exclusive discounts and offers to government employees and pensioners to expand sales.