In India, the market for used cars is larger than the market for new cars. IndianBlueBook, a pricing guide for used vehicles in India, has estimated in 2017 that the market for used cars in India was 1.2 times the market for new cars. While the used car market is significantly large, the number of used vehicles taken on finance is significantly low. The advent of various digital platforms, however, is changing this trend in the used car industry. 

The increasing potential of used car loans in India is bringing in plenty of financial service providers to this industry. Most of them have adopted digital platforms to process loans faster and serve their customers in a better way. Let’s take a look at how these digital platforms are influencing a major change in the used car loan industry. 

Digital innovation 

 There are plenty of sites that provide information about used cars. It is possible to find various online marketplaces likes OLX and Quikr that provide listing services for used cars. There are also companies that deal exclusively in used cars and certified pre-owned cars. These certified pre-owned cars come with a warranty and help customers mitigate the risks involved in buying a used vehicle. Most of these companies have tie-ups with financial institutions to provide affordable loans for second-hand cars. 

Used car loans by banks 

High market growth for used car loans has even attracted major banks to provide this service for their customers. Most of the top banks in the country including SBI, ICICI, PNB, HDFC, etc., provide financing for pre-owned cars. There are also non-banking financial corporations (NBFCs) like Capital First that provide vehicle financing for used cars. You may check the interest rates and other details of these loans by visiting the websites of these banks. You may also use the service of a loan aggregator site like Bankbazaar to check out the different financing options available in the market to know more about used car loan click here.

Market scenario for used cars 

A report by Mordor Intelligence has indicated that the market for used cars in India is around 3.4 million vehicles per year. This is bound to grow to grow in the near future with the rise in overall vehicle sales. It is also believed that factors like economic slowdown and high fuel prices may affect the sale of new cars only. Even during this time, the sale of used cars is bound to grow as they are priced cheaper. In the past, the used car market in India was largely dominated by unorganised players. However, the digital innovation witnessed in the market is likely to consolidate the market and bring in more organised players to the sector. The entry of organised players will bring in more trust with regards to used cars and their demand is expected to go up as a result. 

Challenges in the industry 

The entry of organised players is likely to increase the demand for used cars. However, this comes with its own set of challenges. Getting easy finance for used cars is still a major challenge in India. While new car loans can be obtained easily, used car loans are still not easy to get. Moreover, used car loans come with a higher interest rate than new car loans. This may negatively impact sales to a certain extent. Despite these drawbacks, the industry is expected to change in the future with the entry of organised players. In addition, many manufacturers like Maruti are already involved in the sale of used cars. These companies have tie-ups with financial institutions to facilitate the sale of their used cars. 

Conclusion 

Most industry experts believe that the used car market is likely to witness a major transformation in the future due to the entry of digital platforms. These platforms help customers make an informed decision and guide them with their documentation needs. Lenders also face certain risks when they deal with used cars. The value of the car must be assessed properly before giving out the loans. Despite these minor challenges, the market potential in dealing with used cars has attracted many players to the industry. In the future, the digital innovation we are witnessing right now will play a major role in influencing demand in the used car industry.