Vehicle loans saw their highest growth rate in five years during the festive month of October while consumer durable loans grew at their highest pace since 2019, according to data from the Reserve Bank of India. Vehicle loan disbursals rose 22% year on year in the first three weeks of October while consumer durable loans from banks jumped 57% and credit card outstanding increased 28%. Consumer durable loans are extended for purchase of household goods, consumer electronics and appliances, furniture and mobile phones.
To be sure, the latest RBI data are till October 21, 2022, which mostly include Diwali consumption as the festival was on October 24. Last year, Diwali was on November 4, which means last year’s festive credit disbursal would have happened all through October and the first few days of November.
According to industry executives, share of loan-based purchase of cars has gone up 2 percentage points to 80% this festive season from 78% last year, while for consumer electronics and smartphones, 45% of total purchases were financed against 40% last year.
Banks have kept vehicle loan interest rates competitive despite hardening rates, while electronic brands are extending no-cost EMI offers to the smaller towns with tenure up to 24 months, they said.
Shashank Srivastava, senior executive officer (marketing and sales) at Maruti Suzuki, said the increase in average weighted selling price of vehicles and need for lower down payments meant that there was an increase in the number of loans as well the value of loans disbursed.
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