RBI relief for vehicle owners and buyers: All you need to know

There is some good news at last for those who are paying EMIs for their vehicles, or those who plant to buy a new one. The Reserve Bank of India on Friday has announced that it has reduced repo rate by 40 basis points to 4 per cent and extended the loan repayment moratorium for another three months up to August 31.

The two moves will effectively benefit the car and bike owners who are currently paying EMIs for their vehicles, as well as prospective buyers.

RBI Governor Shaktikanta Das said during a press conference today, "This will facilitate the flow of funds at affordable rates and revive animal spirits. With the inflation outlook remaining benign as lockdown-related supply disruptions are mended, the policy space to address growth concerns needs to be used now rather than later to support the economy, even while maintaining headroom to back up the revival of activity when it takes hold."

The moves are aimed to minimise the impact of coronavirus (Covid-19) pandemic and help people have more money to spend. Earlier, on March 27, the RBI had introduced the loan moratorium scheme for the first time for three months. It is scheduled to end on May 31. The decision was taken after several people took to social media requesting the government to take a call in order to ease financial burden at a time when people are facing cash crunch.

However, after RBI's statement, the banks and other financial institutions still need to implement this to pass on the benefit to everyone. One key thing to remember for those looking to avail or extend loan moratorium on their vehicles is that the balance amount of the EMI will either be adjusted in the remaining tenure of the loan, or you can choose to extend your EMI tenure by the number of months you want to avail this benefit.

Several car makers in India are now taking similar steps to ease the burden on their customers during the coronavirus outbreak. Maruti Suzuki announced a scheme today called 'Buy Now, Pay Later' in its bid to inject life into demand that has slumped over the last several weeks of national lockdown. Among others are Hyundai Motor, which has come up with a EMI assurance plan for its customers. Tata Motors is providing 100 per cent finance for its customers, while carmakers like Toyota and Skoda are offering zero down payment on new vehicles.

Across the world, carmakers have also offered zero percent interest EMIs on cars for seven years, a few others have even offered to defer EMIs for up to 6 months in case any customer loses job after buying a car.