CARS24 forays into consumer lending business, procures an NBFC license to offer loans against used cars
CARS24, a growing tech-enabled used car company, has announced that it has procured an NBFC License from RBI and will be venturing into the consumer lending business. With an aim to provide seamless and instant access to credit, the company has also announced 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.
CARS24, a used car buying and selling platform, 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 a credit based on the car value they are buying, channel partners will be eligible to a credit as high as 1Cr depending upon their requirement. For consumers, the average ticket size of a loan would be Rs. 2.5-3 lakhs.
Commenting on the launch of consumer lending business, Vikram Chopra, Co-founder and CEO, CARS24 said, "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."
The company 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 â€" a first of its kind feature in the Indian used car financing market.
"With our lower turn-around-time for credit as compared to other banks, we believe that our consumer lending business will benefit both our customers as well as channel partners. The idea is to help those buyers who have been unable to fulfill their dream of owning a car due to lack of funds and support from traditional institutions and banks. Our transaction led approach has been our strongest growth pillar and will further strengthen our ability to address the challenges of consumer business. Anyone who is looking for a loan can easily avail it by simply checking the eligibility criteria and completing the documentation work on our website. Once the application is approved by us, one can get the money in hours instead of weeks.", said Ruchit Agarwal, Co-founder and CFO, CARS24.
CARS24, which currently operates in 35+ cities with more than 150 branches, has recently announced its foray into the franchise model and inaugurated its first outlet in Surat. The company intends to scale up its presence in 300+ tier 2,3 and 4 markets by 2021.