Repayment behavior of commercial vehicle loan borrowers with special reference to Namakkal district, India

Vehicle Financing Industry is having an enormous scope and it is expected to grow at a rate of 13 percent Compounded Annual Growth Rate during the year 2016 to 2026. The purpose of this research article is to investigate the repayment behavior of the commercial vehicle finance borrows in Namakkal district. The data was collected from vehicle finance borrowers of Namakkal district. A structured questionnaire was developed with the help of existing research articles. The sample respondents were selected based on convenient sampling method. Questionnaire interview method was used for primary data collection. The secondary data used in the research article was collected from business magazines, text books, business dailies, etc. IBM SPSS software was used for analyzing the collected data, analytical tools like simple percentage analysis, weighted average method and multinomial regression were used in this research. The repayment behavior of the vehicle finance borrowers were classified as normal repayment, pre closure of loans, Delinquent payment and Default. These classifications of the repayment behavior were considered to be the dependent variable and the factors influencing the repayment were considered to be the independent variables. The results reveal that the determinants of repayment behavior were interest rate of the loan, loan to value ratio, tenure or duration of repayment, flexibility in payment option, loan type and type of commercial vehicle the borrower is using. The relative importances of each of the factors that affect the repayment behavior of the borrowers were also analyzed using weighted average method.