Local banks have been crafting a number of strategies to entice a hesitant consuming public into taking their car loans, chiefly reduced interest rates, but which also include financing for insurance, licensing and other expenses.

First Caribbean International Bank Jamaica Limited (FCIBJ) last week began offering to existing car owners a refinancing loan for cars no older than two years, as well as short-term financing for insurance and vehicle licensing of up to $450,000.

The insurance and vehicle-licensing loan will be no more than these expenses cost and must be repaid in 11 months, but is renewable at the end of the period.

The bank stated that Jump Start is available for Jamaicans purchasing new cars. No information could be had on interest rates.

As indicated by the FCIBJ announcement, the facility is intended to "ease the cash flow" of recipients.

high expectations

New incentives being offered by lenders in general may reflect the high expectations among them about the consumer confidence and spending as the holiday season approaches.

In October, COK Cooperative Credit Union began marketing 100 per cent financing offers for cars again, a product which fell off the marketing radar earlier this year.

For 2009 and 2010 cars, the bank offers an interest rate of 19.95 per cent, with five years to pay.

It is also offering 75 per cent financing for insurance at the same 19.75 rate.

With new and used-car dealers reporting more than a 50 per cent decline in sales, the banks' marketers are crafting deals to entice them back into the market for loans.

Scotiabank's president and chief executive officer, Bruce Bowen, says it is not that the market is fundamentally weaker, but that buyers have become increasingly more cautious about their spending habits.

expecting improvement

That mood, he said, is changing.

"The market is getting no weaker and we are going to see gradual improvement," he said.

"Earlier in the year, there were people who needed cars and could afford it, but were nervous and held back because of the general panic. Now people are not as panicky. Today, people are not as panicked and they may not be feeling as nervous."

At Scotiabank, a special rate of 19.25 per cent was on offer to October 31.

As Christmas approaches, the bank has reintroduced a rate of 19.75 per cent for new cars, along with sweeteners of payment terms up to 72 months or six years, a pre-approved Magna Mastercard or Gold Mastercard credit card, and creditor life-insurance coverage of up to $7.5 million.

Bowen said the movement from 19.25 per cent to 19.75 per cent for new cars simply marked the end of a promotion.

Car loans amount to 25-30 per cent of the bank's retail portfolio, excluding mortgages.

Another large operator, National Commercial Bank (NCB), says its car loans as a percentage of the retail portfolio is only 0.5 per cent.

The smaller First Global Bank, however, says its car loan portfolio was 36 per cent of all personal loans.

NCB, since September, began marketing its special 19.75 per cent rate for new and used motor vehicles, which includes "no principal payments" for up to three months.

Scotiabank's retail manager, Elena Villafana Sylvester, said in October that the most popularly priced cars fall within the $2.5 million to $4.5 million range.

At her bank, consumers who purchase a new car for $2.5 million at 19.75 per cent interest for 72 months or six years will pay a monthly charge of $59,520.33 for 100 per cent financing.

Qualifying salaries range from $74,000 to $80,000 after deductions.

avia.collinder@gleanerjm.com