Future of Indian Used Car Loan Market - Car Loan Blog - Tata Capital

Future of the Indian Used Car Loan Market

Mar 09, 2017

India is one of the fastest growing car markets in the world. While new cars are in demand, pre-used cars' demand is also growing at a tremendous rate. There are numerous reasons for the surge in sales of used cars, namely entry of organized used car sellers, increase in disposable income, high savings, and a lower rate of depreciation. The sale of pre-owned cars is expected to reach seven million units by 2020.

Owing to this growing phenomenon, many individuals are seeking finance in order to purchase a used car. A number of well-known non-banking financial companies (NBFCs) and banks provide loans to potential used car buyers. In the last financial year, more than a million used cars were financed in India.

Present scenario of the used car loan market in India

You may avail of a used car loan either online or offline. Online loans are those loans which may be obtained through the lender's online presence. Offline loans, on the other hand, are provided through physical interaction with the lender. There are a number of banks and financial institutions in India that provide loans through both portals.

Even though India has a vast broadband penetration, it was observed that the amount of loans availed of online was very low in the financial year (FY) 2010. The reason for this was lesser loan availability and lack of trust in online portals. But five years since then, there has been quite a surge in pre-owned cars acquired online.

Used car loans are also segregated on the basis of the loan term. Since the concept of pre-owned cars was relatively new in the financial year 2010, lenders did not offer loans for a long period of time. However, this has changed now, and lenders are willing to offer pre-owned car loans for a longer duration.

Future of the Indian used car loan market

The used car market is growing at a pace of about 15% each year according to a recent study conducted by the IndianBlueBook. Given the high demand of pre-owned cars, this market is set to grow even further. This, in turn, means that more people will avail of second-hand car loans. This is a great opportunity for financial institutions and banks, who will gain from this boom.

Therefore, along with the future of the used car sector, the future of used car loan market also has great potential for advancement. A large number of individuals are opting for finance due to a plethora of benefits such loans have to offer. Lenders are providing attractive interest rates, flexible repayment schemes, quicker loan approval, minimal documentation, besides others. You may, therefore, avail of second-hand car loans and purchase your car without facing any financial difficulties.