The Cars24 , an online marketplace for used vehicles, has received a license of a Non-banking Finance Company (NBFC) from the Reserve Bank of India (RBI) and is set to carve out the lending business as a separate entity within the Cars24 group, as reported by Economic Times.
“While new car financing comes very cheap, used car loans tend to be more expensive, since in our case we are anyway inspecting the car thoroughly when it is being sold at our outlets we can underwrite the deal better,” said Ruchit Agarwal, cofounder, Cars24.
Further, the company will also allow consumers who will buy these used cars to take loans from the platform and in times of a financial emergency sell the car back to the platform at the right price and repay the loan.
“We will take some time to set up compliance, get access to credit bureaus, etc. and should be able to go live with our lending business by the second week of August,” he said.
The company which was recently in the news for having laid off a number of employees say it intends to hire around 200 people for the lending business across verticals like risk, credit collection and others.
“The company aims to build a loan book of USD 25 million in the next one year and disburse loans with an average ticket size of Rs 2.5 to 3 lakh. For this it plans to raise debt from the market and may opt for a separate equity funding to finance the business,” said Agarwal.