According to the statement from the representatives of the company, banks are raising the interest rates on auto loans for businesses, even with a collateral of the vehicle until the loan is fully paid off. They claim that the interest rates start from 3.7% and can reach 6%, remaining in the average fixed annually, and can be even higher depending on the policies of each bank. It is considered that these rates increase the cost of the vehicle by 35% - 40% of its initial price after completing payments over 60 months.
Representatives also stated that banks rarely offer special conditions for financing dealerships, and do not lower the interest rates along with the reduced key rate. In addition, there are strict requirements for loans related to accounts, credit rating, and other aspects. They emphasized the need to ensure support for corporations, especially considering that the majority of them need vehicles for solving various operational tasks.
Expert on banking affairs Tamer Abu Bakr noted: "Banks are wary of possible delays in payments from companies, considering possible financial constraints that may affect the fulfillment of obligations upon loan repayment. Unlike individuals, who have a stable income and salary, companies find it more difficult to assess credit risk".
He added: "Although vehicles are secured as collateral, in case of delays, they can be sold at auction, and sometimes the selling price may not cover the remaining debt. Therefore, banks establish high interest rates due to the increased risks of financing".
His commentary was also echoed by banking expert Mustafa Ahmed, noting that the credit rating of companies quickly suffers from returned checks or payment delays, which is a criterion for banks when issuing loans, including auto loans. He added: "This policy operates in almost all banks, interest rates are high, and the requirements for loan approval are considered rather strict, as there are companies that have been operating in the market for several years, which then close their operations".
In accordance with the regulations of the Central Bank, banks offer loans for vehicles for a period of up to five years, that is, 60 months, with 20% provided by the client, and the remaining 80% provided by the bank. The Central Bank does not intervene in setting interest rates for different types of loans, including auto loans, leaving it to the discretion of banks and constantly monitoring compliance by banks with the issued instructions and prescriptions regulating the provision of loans across all sectors of the economy.
