The demand for used cars varies from region to region, and so does the criteria for financing auto products. The auto finance industry has to localize its products and services to remain competitively relevant.
Here are some parameters where the used car loan industry in India differs from other countries:
Size of the market
The market in India for second hand cars is bigger than that for new cars. It’s estimated at about 50% higher, with sales of about 4 million units a year. This roughly translates to a $20 billion market. This presents a great opportunity for used car finance companies.
However, the number of cars per capita is still much lower when compared to other western countries. In the US, the used car market stands at about 230% of new cars, with over 39.5 million units sold in 2018.
The market for the used car loan in India is dominated by banks, which account for about 60% of the share. Second in line are NBFCs with 30% of the pie and captive financiers accounting for whatever remains.
A captive finance company is a wholly-owned subsidiary of an auto manufacturer. Globally, captive financing from manufacturers is the leading source of finance for cars. In Europe, they account for almost 70% of the market share.
In India, if you are looking to buy used cars from authorized dealers, you could explore captive financing.
The purview of car financing in India is quite limited. The association is usually limited to a single transaction. In Western Europe, financing agencies may provide additional value-added services such as insurance, warranty, and maintenance. In fact, many captive financiers even hold a banking license and look to deepen customer engagement through banking accounts and specialized credit cards.
Documentation and eligibility
The second-hand car market in India is highly unorganized and unregulated. Even though there is a mandatory credit scoring system in place (like CIBIL), the turnaround time on financing is massive due to various checks and balances.
Most countries in the western hemisphere have a well-established credit scoring process. This makes it simple for dealers, distributors and financial parties to access information, check creditworthiness and expedite loan agreements.
Tata Capital provides a second hand car loan through an effortless process. You can check your eligibility online and get an in-principle approval in minutes with minimal documentation.
To buckle up
The loan industry for used cars in India has come a long way with digitization, making it much easier to connect sellers, buyers and loan aggregators. However, there is still a lot to learn and adapt.
Tata Capital is looking to provide greater customization, reduce turnaround time and provide reliable after-sales service. They make sure to provide a happy experience for those looking to buy second hand cars in India. So, take a used car loan from Tata Capital and fulfill your dream of owning a car.