CARS24 Ventures Into Financing, Plans $25 MN Disbursement In First Year

Aiming to tap the vast used car market properly, CARS24 have planned to come out with its own financing venture, CARS24Financial Services upon receiving RBI nod for an NBFC licence. In an interview Vikram Chopra, Co-founder and CEO, CARS24 told Aparajita Gupta how the company is planning to disburse $25 million in the first year of operation.

When are you officially launching CARS24 into the financing space and in which parts of the country?

We will commence our operations from August 2019 and our services can be availed in Delhi, Mumbai and Bangalore. Based on the traction that we will get, we are planning to further scale up to other cities gradually.

Why have you chosen to lend in the used car space?

Pre-owned car segment is a $30 million market, which has observed a decent growth in the past few years and is expected to grow even more in the upcoming years. Considering that pre-owned car market is largely driven by supply and not demand unlike new car market, there is a huge market opportunity for financing in the used car space as well to meet the growing demands for used cars among consumers.  Thus, to ensure that our customers and dealer partners have access to credit all the time, we thought of coming up with our own platform.  

The idea is to explore the potential of the industry to the core and address every possible challenge that our customers and channel partners face and making the used car buying process simpler than ever before. Further, we have huge latent demand already in our 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.

What would be the average ticket-size of loan?

We will be facilitating vehicle loans to both our customers as well as to our channel partners. 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 Rs 1 crore depending upon their requirement. The average ticket size of a loan for our customers would be Rs 2.5-3 lakh.

What is your disbursement target for the current fiscal?

We are targeting loan disbursement worth $25 million within the maiden year of our launch. We will be financing at competitive interest rates based on the credit worthiness of consumers and will also allow them to sell their cars to CARS24 at any time in future to pay back the loan – a first of its kind feature in the Indian used car financing market.

What is your hiring and expansion plan for the current fiscal?

We are currently operating in 35+ cities with more than 155+ branches. We have also ventured into the franchise model and have inaugurated our first franchisee outlet in Surat. To further expand our reach, we intend to scale up our presence in 300+ Tier II, III and IV markets by 2021.

For our lending business, we are planning to hire over 200 people.