There has been steady hike in the car sales numbers in the country and the trend is likely to continue as more and more Indians become financially capable of owning a four wheeler. Also during this period the car financing industry has consolidated its hold on the economy and created a special niche for itself in the national economy. All these factors combined point to a healthy increase in car loans in the years to come in India.
What is driving Car financing?
There are several varied factors which are responsible for the continued growth of the car financing in India.
- The economy is stable and there will be more number of people with more disposable incomes in the years to come.
- The continuous introduction of new models catering to untapped segments of the population has resulted in an overall reduced ownership period which directly helps the growth of the car industry and indirectly propels car financing in the country.
- There has been geographical expansion as well as deeper penetration of the financiers’ network which tremendously enhanced their outreach to a larger segment of the population in the country.
- There has been great degree of improvement in availability of reliable credit data which has encouraged the financiers to increase the loan to value for more number of customers resulting in more car loans being disbursed.
- There has been a significant change in the outlook of Indian customers towards availing credit for luxury items such as cars which implies that more number of people are now willing to take loans to buy a car and repay on convenient terms subsequently.
International Factors
There are a few global factors which are aiding the process of increase in car loans India. Most of the western developed nations have reached a plateau in car sales due to slowdown in growth and pre existing customers unwilling to take additional credit burden. Thus there has been a shift in focus of the car manufacturing giants who view the BRIC nations as their future hubs of production as well as sales. Therefore there are many international car manufacturers who have set up manufacturing units all over India. These manufacturers in a bid to increase sales have been providing financial assistance to the existing car financing companies and banks in India to provide better and cheaper car loans which helps to attract more number of customers.
As compared to home loans and loans for consumer durables the car loan segment is all set to reach new heights in the years to come. With increased competition among the car manufacturers and the financing institutions the customers will ultimately benefit in terms of more convenient car loans that are affordable and easy to access.