HDFC Bank is likely to raise its auto loan interest rates by 0.50% in the next 7-10 days. According to the sources this is due to hike in borrowing rates. Another private sector lender, Kotak Mahindra Bank, is also feeling the pressure to raise its auto lending rates though there is no decision on it yet.

According to the sources, with deposit rates going up, there is a possibility of a 0.50% hike in auto loan interest rates. At present auto loan rates range between 9.5% to 10.25% and that the market is a position to comfortably absorb the hike in lending rates. There is even a possibility of rates going up 1% by year end.

The bank’s average auto loans interest rates are in the range of 9.5% (for D-premium category) to 11% (A-category). There is a huge supply shortage and as new models come into the market, demand (for cars) will escalate.

According to the sources, the lender’s car loans disbursement per month is around Rs 1,400-crore while for the entire universe of vehicle financing, it stands at around Rs 2,000-crore per month.