Carmakers tie-up with banks to offer low-interest rate

More bad loans in offing? Carmakers tie-up with banks to offer low-interest rate schemes to attract customers

Several Indian automakers have hooked up with banks to offer purchase schemes involving long frowned-upon teaser loans, as sources say the central bank has softened its stance amid the pandemic-induced economic slump in India.

So far, at least Maruti Suzuki, Hyundai, and Mercedes Benz have launched such schemes, according to press releases over the past week.

Teaser loans offer low-interest rates for the first few months or years to attract customers, but rates are later rapidly increased.

For years, the Reserve Bank of India said their terms were not transparent and warned that similar products had been instrumental in the 2007-2008 subprime crisis in the United States.