How Competition in Car Finance Proves Beneficial For Customer

By Auto Tech Outlook | Monday, November 23, 2020

A robust market for pre-owned cars also has advanced, and it is assessed that the size of the second-hand market is almost as large as that of new vehicles. In addition to banks and Non-Bank Financial Companies (NBFCs), numerous manufacturers have their own financing arms.

FREMONT, CA: Cars are bought for both personal use and commercial applications (cabs). With the arrival of cab or taxi services, liberal pension schemes and pay commission revisions availing a large segment of government employees have seen a sharp upsurge in employment in the services sector such as IT, banking, and financial services. All these have united in the easy availability of finance options for the purchase of vehicles. From banks and non-banks to offer different profiles and segments of car buyers, there has been an exponential increase in car sales, most of which are financed.

A robust market for pre-owned cars also has advanced, and it is assessed that the size of the second-hand market is almost as large as that of new vehicles. In addition to banks and Non-Bank Financial Companies (NBFCs), numerous manufacturers have their own financing arms.

According to a report, it is projected that India’s new passenger vehicle finance market will grow twofold to over Rs 160,000 crore from 2014-15 levels by the turn of the decade. The state’s auto finance market is a growing market, with 74% finance penetration and sub 1% Non-Performing Asset (NPA) levels.

While new car financing has observed sustained growth, the pre-owned car finance market has emerged as one of the fastest rising segments in the past few years. This aspect is also mainly due to the market becoming organized with manufacturers providing pre-owned vehicles through their own branded channels and the swift development of the internet with pre-owned vehicles being presented for sale online and finance options.

The car finance market has arisen as one of the more stable and reliable retail asset finance segments. With higher disposable earnings, a young population, a growing number of models being introduced, shorter first owner life cycles, a robust pre-owned market, enhanced technology, increasing awareness and usage of online options, and a substantial improvement in road networks, the consumer-borrower will last to reap the benefits of progressively competitive interest rates and better and faster service from lenders and sellers.

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