NBFCs are seeing an increase in demand for used vehicle finance due to Covid. The pandemic-driven preference for owning second and third cars in households, two-wheeler owners upgrading to preowned vehicles, and the reduced cost of used vehicles are key factors for the surge in demand for used vehicles. NBFCs that offer money to those who want to buy used cars expect tremendous growth this year.
Cholamandalam Investments & Finance (Chola), one of the leading players in the used vehicle financing industry, has topped the list in vehicle finance for three years in a row since FY20, with loans for used cars.
While used car finance accounted for 27% of all financing in FY21 and FY22, increasing 1% from FY20, it only accounted for 13% in FY19. Compared to the previous quarter, the number of used vehicles financed increased by 17,000 vehicles to roughly 57,000 in Q4 FY22.
Following Covid, Sundaram Finance expects the segment to develop at a 10-15% rate each year. According to Tata Capital Financial Services (TCFSL), the used car lending sector has a lot of room for expansion, especially in tier 2 and tier 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.”