Maruti launches recurring deposit-backed auto loan for small car buyers
I'm LongbridgeAI, I can summarize articles.Maruti Suzuki India Ltd (MSIL) launched 'Suhana Safar', an industry-first recurring deposit-backed auto loan scheme in collaboration with AU Small Finance Bank. Targeting small-car buyers, the scheme allows customers to build savings over 3-6 months, which serve as a down payment upon vehicle purchase. This approach helps customers assess affordability and enables banks to evaluate repayment discipline. Since its launch, MSIL has received approximately 8,000 enquiries, resulting in over 1,700 bookings for models like Alto K10 and Wagon R.
Maruti Suzuki India Ltd (MSIL) has introduced a recurring deposit (RD)-backed auto loan scheme aimed at small-car customers who struggle to arrange a down payment, allowing them to build savings while giving the bank greater visibility into their repayment discipline before the loan is disbursed.
In an interview with Business Standard, Partho Banerjee, senior executive officer (marketing and sales), MSIL, said the "industry-first RD-backed auto loan scheme" was launched last month in collaboration with AU Small Finance Bank for customers of four small-car models: Alto K10, S-Presso, Celerio and Wagon R.
The scheme, called "Suhana Safar", targets customers who aspire to own a car but are hesitant because of concerns around arranging the down payment or managing future EMI (equated monthly instalment) obligations.
Under the scheme, a customer first opens an RD account with AU Small Finance Bank and deposits a fixed amount every month for three to six months. The monthly deposit is set at roughly 80 per cent of the expected EMI on the car loan. For instance, if the estimated EMI on a car is ~Rs 10,000 a month, the customer would deposit around ~Rs 8,000 every month into the RD account during the savings period.
The money accumulated in the RD, along with the interest earned, is not used to repay the loan. Instead, it serves as the down payment when the customer decides to purchase the vehicle. Once the RD matures, the customer can avail of a regular car loan from the same bank and begin paying EMIs in the normal manner.
"The idea came from similar programmes in the jewellery industry," Banerjee said, adding that the scheme allows customers to assess whether a future car loan fits comfortably within their household budget before committing to it.
To encourage customers to complete the purchase after the RD matures, MSIL dealers will reimburse the final month's RD instalment once the vehicle is bought, he noted.
The arrangement also benefits lenders. By tracking the customer's ability to make regular RD deposits over several months, the bank gets ample time to evaluate repayment behaviour and loan eligibility before disbursing the loan. Banerjee said the scheme, therefore, creates a "win-win" situation for both the customer and the financier.
Since the launch of the scheme last month, MSIL has received around 8,000 enquiries so far, which have translated into more than 1,700 bookings, he said. India's largest carmaker is closely monitoring the response and may expand the initiative through additional financing partners in the future, he added.
MSIL sold 194,555 units of small cars — Alto, S-Presso, Baleno, Celerio, Ciaz, Dzire, Ignis, Swift and Wagon R — in India during the April-May period this year, recording 42.03 per cent year-on-year growth.