EMI Provokes Nano Cancellations

Tata Motors has completed allotting the first one lakh Nano in July. Some 55,000 people were named 'retainees' whose booking amounts Tata Motors had retained, promising to pay them interest at the rate of 8.75%.

Currently, it has been noticed that people are cancelling their allotted cars citing the high EMI's the banks are charging on the cars than the usual EMI's.

Central Bank of India received around 9,200 applications for the Tata Nano, of which 7,200 people got their allotments. However, 4,700 applicants are yet to get their cars only in 2011, and a majority of them have opted out according to an official with the bank.

People are being deterred by the huge gap the actual car delivery date and the start of the EMI installments. This is because people are asked to pay the EMIs on the booking amount (between Rs 95,000 and Rs 1,40,000, depending on the model, and the interest paid thereon at the rate of 10%-10.5%) start a month after allotment.

It has been revealed that more "than 60-65% of the 5,000 people" who applied for the car through Union Bank of India have either not got allotment or chosen not to take it.

The Nano is being manufactured at the Pantnagar facility of Tata Motors, which has an annual capacity of 50,000 units. It is apprehended that once the Sanand plant in Gujarat is completed, the company will manufacture 350,000 units a year.

Maruti India Sales Falls First Time in Five Months

Maruti Suzuki India Ltd., maker of half the cars in the country, said sales fell for the first time in five months in August as higher interest rates and inflation damped demand.

Sales fell 9.2 percent last month to 59,908 cars, vans and sport-utility vehicles, the New Delhi-based unit of Suzuki Motor Corp. said in a statement today. That was Maruti's biggest decline in monthly sales since Feb. 2006, according to Bloomberg Data.

Interest-rates at a seven-year high and the fastest inflation rate in 16 years are squeezing consumer spending in India. Slowing growth may undermine a government target of tripling car sales to 3 million vehicles annually by 2015.

"Condition for auto sales have been deteriorating,'' said Mahantesh Sabarad, an analyst with Centrum Broking Pvt. in Mumbai, who has an "accumulate'' rating on the stock. "there has been a substantial increase in interest rates and fuel prices also went up.''

More than half of the vehicles sold in the nation are bought on credit. Maruti said domestic sales fell 10.2 percent to 54,113 vehicles in August. Exports gained one percent to 5,795.

Maruti, 54 percent owned by Japan's Suzuki Motor, fell 2.1 percent to 635.9 rupees at 10:36 a.m. in Mumbai trading.

Car purchase finance options

Financing a car purchase has become rather easy these days. In recent years, a whole lot of financing options have emerged for the potential car buyer. Here we list a few options.

Loan: One of the more famous ways of buying a car is through a car loan. In this case, the car bought through a loan is actually in the possession of the lending institution. The official term used here is “hypothecation” clause?, which basically means that though you own the car, the bank/lending institution is using the car as a security against the loan taken by you. Thus, once you have cleared all the dues, this clause is removed from the agreement.

The self-employed can get tax relief on the interest paid for the car loan (approximately 15 per cent). Also, depreciation to the tune of 10 per cent per annum can be claimed depending on the price of the car.

Hire purchase: In this format, the lender actually buys the car on your behalf and sells it to you on hire purchase. In other words, you hire the car from the lender and own it once you have settled the dues.

The self-employed can get tax relief on the interest paid for the car loan (approximately 15 per cent). Also, depreciation to the tune of 10 per cent per annum can be claimed depending on the price of the car.

Lease: In this case, the car is owned by the financier and leased out to you for a monthly installment, which includes both principal and interest payment. At the end of the lease period, you become the proud owner of the car and the financier transfers the car in your name.

The self-employed can get tax relief on the interest paid for the car loan. However, no depreciation can be claimed as the car is owned by the financier.