SBI announced financing details for Nano, will charge 10% interest on loans

Finally Tata Nano was launched yesterday and keeping to his promise Mr Tata told that the company will offer Rs l lac price for the initial 1 lac customers only because the prices to the related products have increased therefore he will be revising the price of the car for the later customers.

Hence a majority of Tata Nano customers will have to pay more interest payments on the steep booking amount over the next one year. The reason being the Tata Motors will be able to deliver only 50,000-60,000 cars during 2009-10, though the company plans to accept 100,000 applications.

Therefore every customer who books the base version which will cost around Rs 112,000-123,000 from the State Bank of India (SBI), the preferred lenders will have to make an upfront payment of Rs 2,999 as interest charge according to the calculation made at the rate of 10 per cent, and processing fee. Moreover on any further delay in delivery the customer will have to pay additional interest payment at the same rate.

While for the later models the customers will have to pay around Rs 3,300 and Rs 3,900.

Customers who are not willing to avail finance from banks will only have to pay the application fee of Rs 300.

SBI, the sole booking agent for the Nano, has announced its financing details, while most other banks —public, private and non-banking finance companies (NBFCs) — will be revealing their plans over the next few days. It is believed that most of the public sector banks will be keeping the lower interest rate on the advance booking amount than the existing car loan rates.

SBI while announcing its financial details said it will be finance the entire booking amount of the Nano for which for a period of three months the applicant will have to pay an interest rate of about 10 per cent upfront. For the introducing model, customers will have to make a down payment of Rs 95,000. Therefore advance booking amount for the Tata Nano CX will be Rs 120,000 and for the top-end model the booking amount will be Rs 143,000.

Individuals are free to either pay the entire booking amount by themselves or can get finance.

In case there is delay of beyond 90 days in the allotment, Tata Motors will have to pay an interest rate of 8.5 per cent for one year to two years and 8.75 per cent for a period of more than two years.

At the time of allotment of the car, the loan will be converted into a regular car loan in which the interest rate is 11.75 to 12 per cent in case of SBI, with a maximum repayment period of seven years. A senior bank official informant SBI will be taking in consideration the minimum income and other KYC (know-your-customer) requirements before sanctioning the loan.

The customers can obtain applications forms from at over 30,000 locations in about 1,000 cities through Tata Motors passenger’s car dealerships, SBI and its branches, its subsidiaries and associates, other preferred financiers and outlets of Westside, Croma, World of Titan and Tata Indicom exclusive stores.