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Posted On: 19 October 2009 02:40 pm
Updated On: 12 November 2020 02:10 pm

Lending curbs put brakes on used car market

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The used car market continues to suffer enormously with market players blaming the malaise on local banks which they say are yet to relax vehicle lending rules. Despite the massive financial backup Qatari banks have received from the government to help offset the impact of the global economic gloom, they continue to tread with caution, say market operators. They also point out that since much of their business is from citizens who tend to change cars frequently, the market is stagnating as the flow of liquidity is mostly towards the stock market. “The buoyancy of the bourse does not generally bode well for the second-hand car market,” claims a salesman. But people hunting for used cars say despite large supplies which far exceed the demand, the sellers are keeping the prices high as if ‘in a tacitly agreed unison’. “This is quite surprising because used cars do not any more remain the sellers’ market,” pointed out a Qatari who was looking for a large and strong car for his family. “But the prices they are quoting do not reflect a depressed market,” he added. Potential buyers complain that banks are reluctant to give away loans for used cars. Banking sources justify restrictions on lending based on past experience of repayment difficulties. In the case of old cars, banks face a major difficulty as vehicles older than a few years cannot be collateral due to annual depreciation.