OTO Capital raises Rs 5 crore; will focus on expanding car loan base

OTO Capital, which provides loans to people planning to purchase personal vehicles, has raised Rs 5 crore ($700,000) in a pre-series-A round led by Venture Catalysts, along with K Ganesh and Sameer Sawhney. The company was founded by Sumit Chazzed and Harsh Saruparia.

OTO Capital will use these funds to expand across India and build a proprietary analytics engine which can tell a loan’s propensity payment.

The company enables an individual to take a loan for a specific time period that they want to own the car. It can be a period of three to five years, and the individual can change the car after paying the interest for that period. Unlike a bank loan, OTO Capital’s model means that the car is no longer an asset owned by the individual. It is almost like a long-term lease contract.

Sumit is betting on the analytics platform to track the usage patterns of the car and then arrive at its residual value during the end of the term. He had earlier co-founded companies like Credr, CourseWAVE and Enelek Power. Harsh was part of Credr and Housing.com. The duo are IIT Mumbai alumni.

According to SIAM, close to 20 million cars were sold over the last eight years in India, and car owners were tied down by high-interest bank loans.

“With OTO Capital, a customer can walk into the showroom and walk away with the car in 30 minutes by paying as low as Rs 20,000, and the EMI is 30 percent lower than traditional car loans,” says Sumit.

The Venture Catalyst team invested in Oto Capital because car ownership patterns are changing.

Apoorv Ranjan Sharma, co-founder and President of Venture Catalysts, said in a statement, “OTO Capital has cracked the code to alter the way car ownership is perceived in India. It also has a very strong technology backbone and the first-mover advantage in the country. Further, its robust margins, which are almost 2.2 times that of other car financing platforms, display its solid potential to completely disrupt the way Indians look at car ownership and financing.”