NBFCs see demand rising for used-vehicle financing
CHENNAI: Non-banking financial companies (NBFCs) are seeing a rise in demand for used vehicle financing amid Covid. The pandemicdriven preference for owning second and third cars in households, upgrades by two-wheeler owners to preowned cars and lower cost of used vehicles are some primary reasons for the spike in demand for used vehicles.
NBFCs offering loans for used vehicles are bullish about rapid growth in the current financial year. One of the largest players in the used vehicle financing segment, Cholamandalam Investments & Finance (Chola) has recorded loans for used cars topping the list in vehicle finance consecutively for three years since FY20. While the share of used vehicle finance in FY21 and FY22 was 27%, an increase by 1% over FY20, it was just 13% in FY19.
In Q4 FY22 alone, the number of used vehicles that were financed rose to around 57,000, a jump of 17,000 vehicles, when compared with the year-ago period. Sundaram Finance is expecting the segment to grow steadily at 10-15% annually post-Covid. Tata Capital Financial Services (TCFSL) has said that the used car loan market has tremendous potential for growth especially in tier-2 and -3 cities.
Rajiv Lochan, MD, Sundaram Finance, said, “Looking ahead, we see the used vehicle business growing much faster for us. Our target is to achieve 30% share of our overall disbursements from the used vehicles segment over the next three years. ”