2 weeks Ago By Priya Kothari
1 2 3 Pune: The second-hand car market in the country has been growing exponentially, with millennials and GenZ opting to purchase used cars vis-a-vis new cars. Fintech NBFCs said that a large chunk of used car purchases is happening via loans. Siddharth Mehta, a resident of Baner, who recently moved to Pune, also purchased a used car against financing.
"It was the best option for me as I'm new to the city and purchasing a new car didn't make sense to me. I took a loan for my second-hand car. There are many options in the market and a reasonable EMI can be worked out," he said.
Archana and Mohit R, too, bought a pre-owned hatchback against a loan. "We lead busy lives and relying on public transport was not working for us. Buying a car was always a dream, so we bought a second-hand car from a local dealer on loan.
The interest rates for a second-hand car are a bit higher as compared to buying a new car," said Mohit. A report by CARS24 suggested that used car market growth sales were expected to increase from 4.6 million in CY23 to 10.
8 million in CY30, at a CAGR of 13%. Top models in the used car market were Maruti Swift, Hyundai i10 and Honda City in 2024. With more buyers seeking loans to buy used cars, Ruchit Agarwal, co-founder, CARS24, said that India's used cars market was becoming credit-driven (loan-led).
"In 2010, only about 15% of used car purchases were financed compared to 60% of new cars. Fast forward to 2024, that number has jumped to 23% for used cars, signalling increased confidence and accessibility," said Agarwal. Loan disbursements are strongest in states like Maharashtra, Karnataka, Gujarat, Telangana, and Uttar Pradesh, but the share from tier-II cities is growing.
These now account for 26% of total loan volumes, a jump from previous years. Full-stack pre-owned cars platform Spinny said that 57% of buyers opted for loans to finance used car purchases. Hanish Yadav, senior vice-president Spinny, said, "The used car loan market is witnessing strong growth.
This growth is primarily due to a higher share of organised players offering structured loan products and financiers customising loan offerings, including end-of-tenure loans. There is a shift from asset-based lending to consumer-based lending, which is favourable for used car market," he said. Satyam Kumar, CEO and co-founder, Loantap, said, "The volume of sales is very high from the vehicle point of view (for used cars) and loan growth has been 15-16%.
However, pricing and risk is higher than a normal car loan." Despite the growth, financing penetration in the used car segment remains less compared to new cars, indicating untapped potential for financial institutions to further expand financing options in this segment, said analysts..
