Owning a car in India is becoming more expensive each day. Car companies have already hiked their car prices after the Union Budget. There will be another round of price hike after April 2010 when the new emission norms are implemented in the country. This will be due to upgrading cars according to the new emission norms. Moreover, the government has already increased the prices of petrol and diesel in India making car ownership a more expensive affair.

After all this, now car loans have become expensive in the country. Although nationalized banks have yet to announce their price hike, private banks like HDFC, Kotak Mahindra and ICICI have already announced that their auto loans rates have increased by 50 basis points to 100 basis points with effect from March 05, 2010.

Kotak Mahindra has increased its car loans by 50-75 basis points and borrowers will have to pay between 10-10.50 % interest rate. “Borrowing rates have been firming up since the last credit policy. While we did not pass on the rate hike earlier, we need to do it now,” Kotak Mahindra Prime CEO Sumit Bali. ICICI will charge interest rate between 9.75- 11 percent depending upon the tenure of the loan.