Used car buying and selling platform Cars24 has announced that it has procured an NBFC License from RBI and will be venturing into the consumer lending business. It will do so through the formation of a separate entity - Cars24 Financial Services Pvt. Ltd under the Cars24 group. The company will be launching its services in Delhi, Mumbai and Bangalore in August 2019 and will scale up to the other cities gradually.
The company will facilitate vehicle loans to customers as well as finance channel partners to help them expand their businesses. While the customers will be eligible for credit based on the car value they are buying, channel partners will be eligible to credit of up to Rs 1 crore depending upon their requirement. For consumers, the average ticket size of a loan would be Rs 2.5-3 lakh.
“With less than 15% penetration of financing in the used cars segment, we feel that there is a massive market opportunity that can be tapped under the financing sector. We are delighted with this progress and intend to set a benchmark for a delightful customer experience on our platform with our new offering. As a brand, we not only promise an ecosystem for buyers and sellers where they can evaluate their vehicles but can also avail loans for a quicker transaction. We have huge latent demand already in the system due to our scale and branding, and with our first movers’ advantage in the financing business, we are hopeful to make the lives of our end users hassle free,” Vikram Chopra, Co-founder and CEO, Cars24 said in a statement.
The company says that it is planning to hire over 200 people for its newly launched arm and is targeting loan disbursement worth $25 million within the maiden year of its launch. The company will offer financing at competitive interest rates based on the credit worthiness of the consumers. It will also allow consumers to sell their cars to CARS24 at any time in future to pay back the loan.
Ruchit Agarwal, Co-founder and CFO, Cars24 says that the idea is to help those buyers who have been unable to fulfil their dream of owning a car due to lack of funds and support from traditional institutions and banks.