The government estimates 20,000 cars a year will be bought under the program.
Economy Minister Constantin Nita told a news conference Monday the program targets to support young people to purchase new cars, to encourage the purchase of safer and less pollutant cars and to support the local car industry.
The program mainly targets people aged 18 to 35, but other age groups are not excluded. State guarantees on car loans will cover maximum 50% of the loan and the purchased car will represent the rest of the collateral.
Loans will be capped at RON50,000 plus VAT and the cost of the voluntary car insurance policy for the first year. Prospective buyers will have to make a down-payment of 5% to 10% of the loan. The maximum loan period is 84 months.
Authorities estimate the program will stimulate the sale of 2,500-3,000 new cars until the end of the year and 20,000 cars a year.
“The effects we target are the same as those in the First Home program, which was so successful that we assigned it an extra RON700 million at the recent budget revision,” Prime Minister Victor Ponta said Monday.
The Cabinet will analyze a bill regulating this program later this week.
Nita said the guarantee budget will be set by the Finance Ministry and the guarantee funds and four banks have expressed interest in joining the program.
The minister added this program will not be coupled with the cash-for-clunkers program.
Sales of used cars in Romania are triple compared to those of new cars, which post an annual volume of 80,000 units.