ASTANA – Cheap loans to purchase Kazakh-made cars, with a four percent nominal fee rate and five year maximum loan term, will be available beginning April 20.
“As of today, the project is developed, but we plan to sign all the documents on April 20 and begin to work on the project. Meanwhile, we don’t have any failures and problems,” said head of the Kazakhstan Automobile Business Association Andrey Lavrentyev, as quoted by Tengrinews.
Lavrentyev noted the programme is not a new one. Thirty percent of the loan is prepayment for leasing, while the balance is executed under normal acts and acting legislation, and the document package is the same as one for a usual car loan.
“The cheap car loans will be suitable only for cars made in Kazakhstan with a price not exceeding 5.6 million tenge, which is approximately equal to 30,000 U.S. dollars. This is an excellent programme destined for Kazakhstan middle class support,” said Lavrentyev.
Chairman of the Board of the Kazakhstan Independent Automobile Business Union Pavel Kim agreed with Lavrentyev, but considers that the cheap loans are, most importantly, destined for the support of Kazakhstan automobile producers. He noted a fee rate which should be used in second-tier banks is incommensurable with devaluation and the refinance rate. Banks usually need to attract monetary funds from abroad and draw money from Kazakhstan citizens through deposits. In this case, however, banks will get money directly from the government without the need to pay dividends to the state.
Kim added the cheap car loan programme is not limited and will enable residents to purchase any number of vehicles.
“That is why there is no problem with the refinance rate increase and if the programme works as it is planned to work, it will be a very profitable project which can motivate people to purchase cars made in Kazakhstan,” said Kim, as reported by Tengrinews.
The programme is appealing to buyers like 33-year-old Altynai Zhakupova, the head of an electric company purchasing department who purchased a Kia Soul produced by Azia Avto three years ago. She noted she likes her stylish car, which she drives every day, adding she “knows how to control the purse strings” and feels regular residents, as well as Kazakh auto producers, will benefit from the loan programme.
“As the saying goes, ‘a new car is a new car,’ and a cheap auto loan is an undoubtedly-favourable offer considering the low fee rate. While people await tenge devaluation and inflation, using such a loan with a long term is advantageous, indeed. I am sure that if you get such a loan with a long term, you will return it easily because of the devaluation and inflation,” she said in an April 15 interview.
Zhakupova added, however, that not everyone will be able to take advantage of the programme.
“Unfortunately, the purchase of a new car, even using such a cheap loan, isn’t available for a major part of Kazakhstan citizens,” she said.
Despite the low rates, some Kazakhs are choosing not to take advantage of the offer. Kuat Baigozhin, a 42-year-old businessman from Astana, is familiar with the programme, but added he would not use it. He and a friend took a pleasure trip to Russia last month and Baigozhin returned with a car which he said was “a bargain purchase.”
“There is still a great difference in prices for new cars between Kazakhstan and Russia. I saved approximately 8,000 U.S. dollars and really don’t want to pay more in a Kazakhstan car dealership. Even the absence of a warranty didn’t stop me,” he added in an April 14 interview.