This Dhanteras, swipe your credit card and own your favourite set of wheels. With car dealers wanting to close deals, they are increasingly encouraging buyers to swipe their card and part pay for the cars. This also ensures spot conversion for dealers.
"We are seeing customers pay for cars by credit card," says Binod Agrawal, a Tata Motors dealer. Dealers say they can't let the customer out of the door or he will change his mind. So, they ask them to swipe instead of cash or cheque. About five per cent customers have been making upfront payment through cards. Buyers can pay a margin - typically 20 per cent of the car value - upfront.
Industry experts say paying a margin helps customers take a smaller car loan. Car loan rates vary depending on the car type and customer profile. For instance, smaller cars like Alto attract a loan rate of around 12 per cent, it would be lower at 10 per cent for a bigger car like Hyundai Elantra, hatchbacks attract 11-11.5 per cent and sedans around 10.5-11 per cent.
Uttam Nayak, managing director of payment gateway Visa says this is a smart way of making a big ticket purchase. "Payment through credit cards offer a lot of flexibility. Customers can use their entire credit limit especially if they are buying under a limited period offer. Then a customer does not need to worry about not having and/or depositing money in his bank account for the purchase," he says. Also, the customer gets 45 to 50 days to arrange for the funds he has used, he says.
High-profile buyers pay the entire cost through the card. Today, it is not uncommon to see monthly average spends of Rs 10-15 lakh in some high end credit cards.
Rajeev Agrawal, CEO of Innoviti, a Bangalore-based payment solution provider, says credit card payments also help earn loyalty and rewards points, which can be set off against other purchases. And given 20 per cent of a car cost can be a big amount - 20 per cent of the Rs 12 lakh costing Hyundai Verna is Rs 3 lakh - the rewards points will also be high.