Coined ‘Xpress Car Loans’, the country’s largest private bank is offering end-to-end car loans to customers within 30 minutes through an online platform in what it claims is an industry first and probably the first such offering in the world. At present, it takes 48-72 hours for a prospective car buyer to secure vehicle financing. Car loan is the second biggest ticket item for which an individual customer borrows after home loan.
The bank expects to disburse Rs 10,000-15,000 crore of car loans in FY23 without a physical presence, led by strong hinterland buying, a senior company executive said.
While it has started offering hassle-free car financing in half an hour, HDFC Bank plans to eventually start disbursing two-wheeler loans too through such a complete digital interface, officials said.
Arvind Kapil, country head, retail assets, at HDFC Bank, said this could redefine simplicity of availing a car loan, particularly in semi-urban and rural India. “We believe it’s a game changer for the industry at large,” he said. While 90% of all car-buying journey in the country begins online, less than 2% of it is end-to-end digital at the dealership and only a miniscule of car financing is closed online, Kapil said. “We aim to bring in at least 20-30% of our existing customers and non-account holders through Xpress Car Loans.”
According to HDFC Bank, 55% of the potential car buyers want to minimise physical contact and the bank is bullish on digital funding taking off in a big way. While 20% of vehicle makers’ spending has moved online, the digital sales penetration is marginal, it said.
While the company is well penetrated in major cities, Kapil said semi-urban and rural markets offer a much bigger incremental opportunity for HDFC Bank to tap into.
To be sure, car loan disbursals in semi-urban and rural areas is growing at 40% per annum and in the coming years 50% of the incremental sales growth is likely to come from these areas, according to the company. The rural thrust of HDFC Bank was seen in the year ended March 2022 when its hinterland disbursals grew at double the pace when compared to tier I and tier II cities.