Economy, Auto
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Loan Glitches Impeding Delivery of Cars

Loan Glitches Impeding Delivery of CarsLoan Glitches Impeding Delivery of Cars

The Central Bank of Iran will reimburse banks for the auto loans, as soon as they present the sales documents, said the head of CBI’s Credit Department.

Ali Asghar Mirmohammad Sadeqi added that the central bank has already reimbursed Bank Sepah and Bank Tejarat, ISNA reported.

“Banks have been advised not to send their documents in one lot, because the gradual settlement of loans will prevent any possible delay in delivering the cars to buyers,” he said.

CBI allocated funds for the 250-million-rial ($8,300 at the official exchange rate) auto loans as part of the government’s economic stimulus.

  SAIPA

Earlier, SAIPA’s sales deputy had said cars sold under the auto loan scheme will not be delivered until the paperwork is complete, which depends on how soon the CBI manages to provide the credit.

According to Reza Taqizadeh, other steps that need to be taken before a car is delivered include the issuance of vehicle registration documents and license plate numbers.

To help jumpstart the ailing auto industry, the government introduced an auto loan scheme early November. The loan carried an interest rate of between 16-18% and a payback period of maximum seven years that was soon reduced to four years.

The plan stipulated that no more than 110,000 people would be allowed to take the loan that should amount to 80% of the car price. In only six days, 110,000 cars were sold.

Taqizadeh added that the cars must be delivered within a month from the time the CBI provides the carmakers with the promised credits.

“The vehicles are ready to be delivered. We predict that once the CBI provides the credit, about 60% of the vehicles will be delivered to the customers in maximum 10 days,” he said.  

Asked about the 20,000 more applications accepted by the automakers, surpassing the ceiling set by the CBI, Taqizadeh said the automakers will either receive loans from banks or themselves provide the funds.

“The amount of loans that each carmaker will receive eventually is not clear yet, but we will fulfill our obligations toward our customers,” he said.

He added that the automakers will not accept any new applications until all the cars ordered with the loan are delivered.

Taqizadeh’s remarks made customers doubtful of receiving their cars on time and also prompted other officials to respond.

  CBI Contradiction

In response to Taqizadeh’s comments, another CBI official said the automakers must comply with the dates mentioned in the contracts and make their deliveries accordingly.  

Mohammad Reza Qorbani, the head of CBI’s Credit Office, added that there had never been any talk of CBI directly providing the automakers with the funds at any point.

Qorbani, however, said, “CBI is ready to provide the funds to the banks as was planned, but the banks have not yet handed in the necessary documents.”

He noted that the CBI was to provide credits for a maximum of 110,000 vehicles and will do so as promised, stressing that the banks do not have to procure that amount from other sources.

  IKCO Assurance    

Officials with the country’s largest auto manufacturer, Iran Khodro Company, also commented on the issue.

According to Mostafa Khankarami, the company’s sales and marketing deputy, the cars will be delivered according to schedule.

He stressed that none of the dealerships is allowed to deliver the cars to the customers before they have been allocated a license plate.    

“Customers need not worry; the cars they have purchased will be delivered on time,” he said.

  Gov’t Clarification

Mohammad Baqer Nobakht, government spokesperson and head of the Management and Planning Organization, said it will take some time for the relevant documents to be processed by the CBI, the banks and the automakers.

“The Management and Planning Organization will be closely monitoring all steps of the process,” he said.

Nobakht noted that the auto loan scheme will not be suspended, adding that “if there are any problems hindering the process, we will look into them and try to solve them.”

  Debt Settlement

Bank Saderat announced last week that the government’s new auto loan scheme will help settle car manufacturers’ debts to the banking sector and would not have any inflationary effects.

“The loan would not stoke inflation but will help the flow of liquidity into manufacturing,” Esmaeil Lalegani, the bank’s CEO, was quoted as saying.

Lalegani referred to the carmakers’ huge debts to banks and said the loan scheme would help reduce their debts, adding that 80% of revenues generated from the loans would be paid to automakers.

“There would be no increase in liquidity and apparently no additional inflation is expected.”  

Lalegani said the cooperation of banks in the car loan scheme is in line with their responsibility to help promote the national economy, because such schemes help reduce bad debts.

Financialtribune.com