According to TechSci Research report, “India Car Loan Market – By Region, Competition, Forecast & Opportunities, 2030F”, the India Car Loan market stood at USD 23.97 billion in 2024 and is expected to grow USD 40.35 billion by 2029 with a CAGR 9.13% through 2030.
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The India Car Loan Market is experiencing significant growth, driven by urbanization, and the rising popularity of personal vehicles. Consumers are increasingly opting for both new and used cars, supported by favorable financing options from banks and non-banking financial companies (NBFCs). In addition, the growing demand for electric vehicles is reshaping financing strategies, with institutions introducing specialized loan products.
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The growing popularity of used cars in India is a significant trend influencing the car loan market. Consumers are increasingly recognizing the financial benefits of purchasing pre-owned vehicles, including lower upfront costs and reduced depreciation rates. This shift in consumer behavior has led to a surge in demand for used car loans. Financial institutions are responding by developing tailored loan products for used cars, including flexible repayment terms and competitive interest rates. Additionally, initiatives like certified pre-owned programs and comprehensive vehicle inspections are enhancing consumer confidence in used car purchases. As the used car market continues to expand, the demand for financing solutions is expected to rise, providing further opportunities for lenders to grow their portfolios.
As India’s economy continues to grow, rising disposable incomes have significantly influenced consumer spending behavior. More individuals and families can allocate a portion of their income towards purchasing personal vehicles, which has led to increased demand for car loans. The aspiration for personal mobility, coupled with higher earning potential, encourages consumers to invest in cars as a necessity rather than a luxury. This shift in mindset has made car ownership a feasible goal for many, propelling the car loan market forward.
The India Car Loan market is segmented into type, car type, source, percentage of amount sanctioned, type of city, tenure, regional distribution, and company.
Based on tenure, the 3-5 years tenure is the fastest-growing segment in the India Car Loan Market, reflecting consumer preference for shorter loan durations. This trend is driven by increasing awareness of the financial benefits of quicker repayment periods, including lower overall interest payments. Additionally, many consumers are opting for flexible financing options that allow them to upgrade their vehicles more frequently. Financial institutions are responding to this demand by offering tailored loan products that provide competitive rates and personalized repayment plans, enhancing affordability and accessibility for buyers within this tenure range.
Based on region, the South region is emerging as the fastest-growing segment in the India Car Loan Market, driven by a combination of factors. Rapid urbanization and increasing disposable incomes are leading to a surge in vehicle ownership, particularly among young professionals. Additionally, a strong network of dealerships and financing institutions enhances accessibility to car loans. The growing popularity of personal mobility solutions, coupled with government initiatives promoting electric vehicles, further stimulates demand. Financial institutions are adapting by offering competitive loan products tailored to the unique needs of South Indian consumers, reinforcing the region's dynamic growth trajectory in the car loan market.
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Major companies operating in India Car Loan market are:
- State Bank of India
- HDFC Bank Ltd
- ICICI Bank Limited
- IDFC FIRST Bank Limited
- TATA Motors Finance Ltd.
- Shriram Finance Limited
- Mahindra & Mahindra Financial Services Limited
- Axis Bank Limited
- Kotak Mahindra Prime Limited
- Toyota Financial Services India Limited
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“The role of Non-Banking Financial Companies (NBFCs) in the India Car Loan Market has grown significantly over recent years. NBFCs are becoming prominent players by offering personalized services, flexible financing solutions, and quicker approval processes compared to traditional banks. This agility allows them to cater to the diverse needs of consumers, particularly those seeking used car loans or those with lower credit scores. Moreover, NBFCs often leverage technology to streamline operations, thereby improving efficiency and reducing costs. As they expand their reach, NBFCs are expected to play an increasingly vital role in meeting the financing demands of the growing car market.” said Mr. Karan Chechi, Research Director of TechSci Research, a research-based management consulting firm.
India Car Loan Market Segmented, By Type (New Car, Used Car), By Car Type (SUV, Hatchback, Sedan), By Source (OEM, Bank, NBFCs), By Percentage of Amount Sanctioned (Up to 25%, 25-50%, 51-75%, Above 75%), By Type of City (Tier 1, Tier 2, Tier 3, Tier 4), By Tenure (Less than 3 Year, 3-5 Year, Greater than 5 Year), By Region, Competition, Forecast & Opportunities, 2020-2030F”, has evaluated the future growth potential of India Car Loan market and provides statistics & information on market size, structure and future market growth. The report intends to provide cutting-edge market intelligence and help decision makers take sound investment decisions. Besides, the report also identifies and analyzes the emerging trends along with essential drivers, challenges, and opportunities in the India Car Loan market.
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