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Two-wheeler loans may get more expensive due to repo rate hike

05 May 2022, 10:54 AM Pratheek Kunder
Two-wheeler loans may get more expensive due to repo rate hike

-         Two-wheeler loans could get expensive 

-         Repo rate hiked to 4.40 per cent 

-         EMIs likely to increase 

Two-wheeler loans in the coming months are expected to get more expensive after the Reserve Bank of India increased the repo rate by 40 basis points to 4.40 per cent. 

While the repo rate hike is applicable from immediate effect, the two-wheeler loans may see some change in the next few weeks. Due to this hike, the EMIs are expected to go up, and when that happens, the demand for motorcycles and scooters may go down, especially in the entry-level segment. 

This new repo rate hike applies to all retail loans including car and home loans. So there will be some effect on an individual’s overall financials. The buyers are likely to stay away from borrowing new loans for a few months and that is bound to affect the overall sales of the industry which sadly hasn’t been growing as it was supposed to. 

The RBI’s move of increasing the repo rate by 40 bps has taken everyone off guard. This move will curb excess liquidity in the system and will make auto loans expensive. While the PV segment may be able to absorb this shock due to long waiting periods, the 2W segment which has been a non-performer due to an underperforming rural market, vehicle price hikes and high fuel costs, will not be able to take one more blow of high vehicle loan costs. Certainly, this move will apply a certain amount of brakes on auto retail and dampen the sentiments further,' said Vinkesh Gulati, president FADA.  

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