Coronavirus has undoubtedly impacted the Global Economy and none of the sector has escaped from it. There is something critical which is not getting noticed. This is not just limited to one country. Definitely this logic applies to the whole world.
Suggested Read : Points to Keep in Mind if you are puchasing car during Coronavirus time.
How the Car Loan in Coronavirus time will impact Banking Shares
I will not write any general content here, rather will ask you one question. How many people you know buy a car on full payment and how many take a loan for their vehicle purchase.
As per our data, almost 80% of the people get a finance on their cars. Now when the Coronavirus is hitting the cash flow and people are loosing out their money, there will be cases where the people won’t be able to pay their monthly loan instalments, which will definitely impact the bank’s revenue. Bank shares will definitely fall to distribute the loss within every shareholder.
To understand the impact, we gathered a data of the Cab drivers of New Delhi. Majority of the cab drivers purchased their car on monthly loan instalments . They had a plan that they will be earning their livelihood and will be paying for their car loan. Now with the virus and lockdown, nobody is using the public transport and they have no hope that they will be paying their EMI.
Now the big trouble is that banks will see a lot of such cases where people will not be paying their loan amount back. Undoubtedly they will compensate the loss from the shareholders.
If you are planning to buy banking stocks and you are thinking that you will make good money, then you must keep in mind that this price is not the bottom. Even more dips are expected in banking stocks.