SBI to Offer Car Loans Only For People Earning 2.5 Lakh per Year

The State Bank of India (SBI) announced that it would offer car loans for those who earn at least Rs.2.5 lakh per annum or about Rs.21,000 a month. Earlier, the annual income limit was Rs.1 lakh or Rs.8,300 per month. But on 25th January 2012, the bank has raised the minimum income requirement for car loan borrowers by raising interest rates on car loans by 75 basis points to 12%.

A senior official of SBI auto loan business said that there have been some delinquencies during the past 6 months and this made the bank to take such proactive step. The bank officials obtained data from various centers which showed that there was stress on repayments in this auto loans segment because of rising cost of living, especially among those customers who had other loans. Moreover, because of the low interest on auto loans than personal loans, people tend to take more auto loans.

Thus, SBI has put the new annual income limit of Rs.2.5 lakh, safe enough for both the bank as well as car loan borrowers. It reports that, those who are looking to migrate from two-wheelers to small cars should at least earn enough income to spare for a monthly payment of say, around Rs.1,765 per month.