Auto Payment Plans Compared

Since the signing of the historic Joint Comprehensive Plan of Action in November last year, the Islamic Republic’s automotive industry has begun to adapt to a more liberal playing field, at least regarding companies entering the market.

With this new phase in mind, payment plans are also becoming more flexible for long suffering consumers.

Financial Tribune has collated several offers made by leading domestic and foreign car companies in the Iranian market, including the payment length, to give readers a better understanding of what is currently available for car buyers.

(A full list of offers is presented alongside this article with percentages and payment lengths, but for the sake of clarity the focus is on payment length as a comparison.)   

Each payment duration is listed in a descending order with the longest plan coming first and the shortest coming last.

In this latest overview, Chinese-backed local assemblers lead in terms of making special offers while local firms, like Iran Khodro, Pars Khodro and SAIPA are attempting to catch up.

 The Winners

First place in the payment plan competition goes to the independent completely knocked-down assembler, Diar Khodro, which produces the Chinese-derived Great Wall brand in Iran. This company offers a payment plan of 48 months for its vehicles.

In second place come eight other companies, namely IKCO, Negin Khodro, Kerman Motor, Golrang Motor Family, Geely, Hyundai, Kia and MVM (Chery), with an offer of 36 months.

A representative from MVM noted, for example, that their 36-month program tracks the base rate of inflation and is thus interest free. The other companies offer low interest to drum up sales.

However, Kia and Hyundai models are significantly more expensive than their Chinese counterparts, as they are fully assembled outside Iran. Geely also offers a 36-month package, but their payment options remain limited, according to their website.

At 32 months, SAIPA, Iran’s second largest carmaker, makes an attempt to attract customers to models, including the locally produced Brilliance.

The next longest duration loans possible are provided by Mitsubishi’s representative Arian Motors, Bahman Motor, Irtoya (Toyota) and Persia Khodro (BMW). These companies are offering specific payment plans for 24 months on most models.

SAIPA appears again on the list for offering 15 months for the locally assembled Kia Cerato hatchback. There is no explanation why the company offers this as a separate payment plan, but it could be related to the company’s deal with Kia.

 The Laggards

Chinese-owned MG is next on the list with 12 months of finance options for car buyers, according to the FT’s research team. This offer includes new models like the MG SUV that only went on sale in recent weeks.

The local companies are not the worst offender. Alfa Romeo (Alfa Motor) is the worst performer in offering credit to consumers, as it has zero payment plans, and according to its website does not seem to be offering more than the usual “Buy it Now” price.

Several independent dealers have gone beyond their proper payment deals with at least one representative of Kerman Motor offering long payment terms of seven years.

However, many people in Iran, especially those on tight budgets are hoping (possibly in vain) that the government and the Central Bank of Iran restart their successful “National Auto Loan” scheme.

In January this year, it was reported, by this paper, that the 250 million rials ($7000) loan could make a reappearance.

The payment scheme ended after applications exceeded the 110,000 ceiling in six days.

The upper limit of auto loans provided in the past used to be 150 million rials ($4,270). Customers had to pay the amount back over 36 months with an interest rate of 20%.

The payback period was reduced from a maximum seven years or 84 installments to four years or 48 months, IRNA reported at the time.