CARS24 Research Report: 3 out of 5 Indians Prefer Getting their Car Financed

CARS24 shares trends as its Financial Arm Disburses Over INR 2000 Cr in Pre-Owned Car Loans, Achieves Net Profitability

• 75 percent of individuals in Tier 2 and Tier 3 cities in India opt for car financing
• The average age of Indians securing car financing stands at 32 years
• Average EMIs for used cars range between INR 10,500-11,500
• 45 percent year on year  increase in loans disbursed to women 
• Hatchbacks emerged as a popular choice for car financing
• March 2023 records the highest loan disbursement in a month 

National, 07 June 2023: CARS24, India's leading AutoTech company, has marked a significant milestone through its financial arm, CARS24 Financial Services Pvt Ltd (CFSPL). With an impressive track record and extraordinary growth, CFSPL has achieved an astounding 100 percent year on year increase in loan disbursements and has surpassed the remarkable milestone of INR 2,000 Crore since inception. This exceptional growth, coupled with sustained net profitability, has not only transformed the dreams of countless car enthusiasts into reality but has also solidified CARS24's position as an unrivalled leader in the industry.

Setting itself apart as the pioneer in the pre-owned car industry, CARS24 obtained an NBFC licence in 2019, cementing its position as a comprehensive solution for pre-owned car buyers. The company is committed to providing an exceptional experience to the next generation of pre-owned car buyers by streamlining the buyer and borrower journey. By offering end-to-end support and hassle-free financing options for all cars, CARS24 empowers buyers to choose financing offers that perfectly align with their budget and individual needs. This customer-centric approach has resulted in a remarkable product-market fit, with the company delivering straightforward yet powerful financing solutions.

As we celebrate this significant milestone, we have uncovered fascinating insights into India's car financing landscape that will have a profound impact on the industry's future. The trends observed in used car financing mirror those of new car financing, highlighting the evolving preferences and behaviours of car buyers. 

Breaking Barriers: Car Financing Trend Reaches Tier 3 Cities in India 

A remarkable trend is reshaping the car ownership landscape in India. In non-metro cities, an astonishing 75 percent of Indians in Tier 2 and 3 cities are opting for the convenience of car financing, while even in bustling metro cities, 60 percent of Indians have joined the car financing movement. 

This nationwide shift reflects a growing desire for financial freedom and turning car ownership dreams into reality. The financing boom extends across cities, with Tier 1 markets such as Delhi-NCR, Bengaluru, and Hyderabad and Tier 2 cities like Lucknow, Surat, and Jaipur, witnessing significant loan uptake. Even Tier 3 cities like Patiala, Alwar, and Bharuch have joined the loan frenzy, making used car ownership more accessible across India.

This widespread acceptance of car financing represents a significant milestone in the Indian automotive industry, showcasing the nation's collective aspiration for personal mobility and the pursuit of dreams. The stage is set for a new era, where car ownership is no longer confined to a select few, but an achievable reality for the masses.

3 out of 5 Indians prefer getting their cars financed 

The car financing landscape in India is witnessing a notable trend with an increasing number of young individuals opting for car loans. The average age of people preferring to finance their cars stands at 32 years, indicating a strong presence of working millennials, including salaried employees and young entrepreneurs. This demographic shift is accompanied by a growing preference for the convenience and flexibility offered by car financing options. 

With an average EMI ranging from ₹10,500 to ₹11,500 per month with a tenure of up to 72 months, car financing has become a viable solution for many. The data reveals that every 3 in 5 customers choose to finance their cars, highlighting the popularity of this financial approach. 

In today's fast-paced world, the car financing landscape has undergone a remarkable transformation with a strong focus on digitization. This shift has resulted in a streamlined and efficient car financing process, allowing customers to obtain loan sanctions within an astonishingly short time frame of as low as 2 hours. This accelerated timeline has gained immense popularity among modern car buyers who value speed and convenience. The ease and accessibility of car financing have become key drivers in attracting more young individuals who are seeking financial flexibility and a hassle-free car ownership experience. With the advent of digitization, the car financing industry has successfully adapted to the evolving needs of today's generation, making the dream of owning a car more attainable and fulfilling for tech-savvy youth.

Unlike the conventional approach of paying upfront or resorting to high-interest personal loans, car financing offers a plethora of benefits that make it the preferred choice for smart consumers. By spreading the cost of the vehicle over manageable instalments, individuals can afford cars without straining their finances. 

Women Embrace Car Financing, Redefining the Road to Ownership

An encouraging trend in the car financing sector is the notable 45 percent increase in loans disbursed for women every year. Traditionally, car financing has been predominantly associated with male buyers, but there has been a significant shift in recent years. More women are taking charge of their financial independence and embracing car ownership through financing options. 

This rise in women opting for car financing reflects the growing empowerment and economic participation of women in India. It also highlights the need for tailored financing solutions that cater to the unique preferences and requirements of women buyers. As more women join the car financing movement, it presents a tremendous opportunity for the industry to diversify its offerings and create a more inclusive and equitable car buying experience for all.

Over 60 percent of first time car buyers prefer financing, it's more convenient they said!

In the ever-evolving landscape of car ownership, another intriguing trend has emerged among first-time buyers in India - the preference for car financing. Aspiring car owners who are venturing into the realm of car ownership for the first time are increasingly opting for the convenience and flexibility of financing options. In fact, according to CFSPL’s data, over 60 percent of first time car buyers have financed their cars in the last one year. 

This shift can be attributed to several factors, including the rising costs of vehicles, the desire for newer models with advanced features, and the availability of attractive loan packages tailored to suit the needs of first-time buyers. 

Hatchback Models: Swift, i10, and Kwid Lead the Way in Popular Car Financing Choices

Affordable hatchback models such as Maruti Swift, Hyundai i10, and Renault Kwid have secured their place at the forefront of popular car financing choices. These vehicles have captured the attention and preference of car buyers looking for a cost-effective yet reliable transportation solution. These compact vehicles offer a cost-effective solution for individuals seeking car ownership, with lower price points compared to larger car segments. The availability of car financing options allows buyers to spread the cost of a hatchback over time, making it a more manageable financial commitment. Additionally, hatchbacks are known for their fuel efficiency, making them a practical choice for daily commuting and reducing overall ownership costs. With their combination of affordability and practicality, hatchbacks have become a top choice for individuals seeking car financing solutions.

The March of Loans: India's Car Financing Hits a Historic High in 2023

March 2023 marked a significant milestone in India's car financing landscape, with the highest loan disbursement recorded in a single month. According to CFSPL, Customers enthusiastically availed loans amounting to an impressive INR 150 plus crore during this period, indicating a substantial surge in car financing. This trend aligns with previous years' data, where March consistently witnesses the highest number of cars being financed, showcasing a recurring pattern. 

The remarkable increase in loan uptake during March can be attributed to various factors. Firstly, there is a growing desire among individuals to own personal vehicles, driven by the need for convenience, mobility, and independence. This aspiration fuels the demand for car financing as customers seek financial assistance to fulfil their dreams of car ownership. Additionally, March serves as an opportune time for car purchases due to several favourable factors. The commencement of the new financial year in India prompts individuals to make significant investments, including acquiring cars. Moreover, end-of-season discounts and promotional offers provided by car dealerships incentivize customers to finalise their purchases during this period. Furthermore, the utilisation of yearly bonuses or savings further contributes to the surge in car financing, as individuals leverage their financial resources to acquire vehicles. The notable increase in loan disbursement during March not only signifies the growing popularity of car financing but also highlights the importance of timing and market dynamics in the car purchasing process. As individuals strive to achieve their aspirations of car ownership, the availability of attractive financing options during this period plays a pivotal role in driving the remarkable surge in loan uptake.

Talking about the new milestone, CARS24 Co-founder & CFO, Ruchit Agarwal said "Our ultimate objective is to ensure that car ownership becomes accessible and convenient for everyone, and this milestone is a testament to our unwavering dedication to bringing this vision to life. We remain steadfast in our commitment to providing an exceptional and customer-centric experience, empowering individuals to fulfil their car ownership dreams with ease and satisfaction."

Attractive interest rates, zero down payment, and flexible repayment terms provided by leading car financing providers, such as CARS24, have played a pivotal role in igniting this financing revolution. 

CARS24 is leading the way in reshaping the car sales and ownership landscape across India, with a strong presence in over 100 cities. As the industry adapts to evolving trends and technologies, CARS24 is driving the automotive sector forward, positioning itself at the forefront of this transformative journey.