In the fast lane of financial trends, one phenomenon is racing to the forefront - the exponential growth of vehicle loans in India. As outstanding vehicle loans soar to new heights, reaching an impressive Rs 5.09 lakh crore as of May 2023, the lending landscape is witnessing a revolution, with vehicle loans becoming the second-largest segment. In this blog, we explore this accelerating trend and delve into the urgency of meeting the expectations of today's impatient customers, who seek swift and efficient loan offerings. Buckle up as we navigate the dynamic world of vehicle loans, where speed and efficiency take the driver's seat.
Growth Trajectory of Vehicle Loans
Over the past three years, vehicle loans from banks have witnessed a remarkable 137% increase, reaching an impressive Rs 5.08 lakh crore. This growth trajectory is evident from the figures in May 2021, where outstanding vehicle loans amounted to Rs 3.65 lakh crore. By May 2022, this figure had climbed to Rs 4.16 lakh crore, marking substantial growth. Despite the Reserve Bank's rate hikes in 2022-23, vehicle loan outstanding continued to surge, emphasizing sustained demand in the vehicle loan market.
Vehicle loans have become the second-largest loan segment, closely following home loans in terms of loan size per customer.
Constituting around 12% of total lending in the past three years, vehicle loans have seen a significant increase from the previous years when they accounted for approximately 10% of the lending market.
The rise in demand can be attributed to the launch of new vehicles with enhanced designs and features, resulting in higher prices. This increase in vehicle prices has led to a surge in car loans, with the average loan size also on the rise.
The shift toward a formal economy and a growing number of individuals filing income tax returns have enhanced loan eligibility.
Fintech companies have made loans more accessible, simplifying the process of obtaining credit for individuals.
These statistics underscore the growing importance of vehicle loans in the lending landscape, with Diwali acting as a catalyst for the surge in demand.
Two-Wheeler Loan Boom
One segment that particularly shines during Diwali is two-wheeler loans. With the desire for instant mobility and freedom, two-wheelers have become an essential part of many households' Diwali celebrations. The demand for two-wheelers continues to rise, making this segment a significant driver in the vehicle finance industry.
ICICI Bank: Two-wheeler segment - Rs 2,215 crore in Q2FY24 (up from Rs 1,772 crore YoY).
IndusInd Bank: Two-wheeler finance - Rs 4,923 crore in Q2FY24 (22% increase from Rs 4,030 crore).
September 2023 two-wheeler sales: 17.49 lakh units (growth from 15.28 lakh units in September 2021).
Challenges in Vehicle Loans and the Need for a Strong Vehicle Lending Suite
The growing demand for vehicle loans comes with its set of challenges. Financial institutions need to navigate complex processes, assess creditworthiness swiftly, and manage collateral efficiently. The need for a robust Vehicle Lending Suite is evident, one that can streamline these operations, enhance the customer experience, and adapt to changing market dynamics.
Why Quick Decisioning Matters in Vehicle Loans
In the fast-paced world of vehicle finance, speed is paramount. The demand for new vehicles during Diwali calls for swift decision-making and efficient loan processing. Synoriq understands this urgency and offers a Vehicle Suite designed to disburse vehicle loans in as little as 10 minutes.
The 10-Minute Disbursal Process:
1. Lead Creation: Initiate the process by creating a lead and inputting basic customer details.
2. KYC and Bureau Check: Perform PAN card and EKYC verification, securing consent for hitting Bureau details and conducting a Go-No-go assessment by the system.
3. Credit Evaluation: Utilize ITR analyzer, bank statement analyzer, and GST analyzer (if needed) to feed information into the BRE. The system generates an offer for the customer, raising deviations if necessary.
4. Sanction and E-Sign: Upon acceptance of the offer, move to the sanction stage, followed by seamless E-signing for quick disbursal.
All these steps are accomplished in under 10 minutes, ensuring a swift and efficient loan disbursal process.
Post-disbursal, the file seamlessly transitions to the LMS for servicing, equipped with specialized features for Vehicle loans. This includes a Repo/Seize module and auto-generation of Form 35, enhancing the overall efficiency of loan servicing.
Synoriq's Lending Suite Capabilities
Addressing the need for swift decision-making in the fast-paced world of vehicle finance, Synoriq's lending suite offers an array of software modules designed to streamline the entire loan processing journey.
1. Mobile App for Field Sales Team/Dealers
Synoriq's mobile app empowers field sales teams and dealers, providing a user-friendly platform for seamless customer interactions. The agility and supportiveness of our team ensure a digital and mobile-first onboarding process.
2. Business Rules Engine (BRE)
The robust BRE streamlines decision-making processes, ensuring quick and accurate evaluations. It plays a pivotal role in achieving the swift turnaround crucial for the vehicle finance industry.
3. Loan Origination System (LOS)
From lead creation to disbursement, Synoriq's LOS simplifies and accelerates the entire loan origination process, facilitating a smooth journey for both lenders and borrowers.
4. Loan Management System (LMS)
Seamlessly managing the entire lifecycle of loans, LMS ensures efficient servicing and collections. It caters to the diverse needs of vehicle loans, including asset classification, bucketing requirements, DPD posting, interest accrual, provisioning, and more.
Synoriq's suite includes a Collections app, supporting post-disbursement activities and providing granular control over receipt allocation, charges management, collateral management, rescheduling, tranche disbursement, knock-off processes, and accounting.
Features that Set Synoriq Apart
Synoriq's lending suite is not just about speed; it's about comprehensive features that cater to every aspect of the lending process:
Sales App: Providing quick decisions on loans, EKYC verification, real-time dashboards, watermarking for photos, single sign-on, mobile app notifications, initiation of NACH, and performance tracking.
Credit Portal: Offering reports for higher management, real-time dashboards user-wise and stage-wise, system-generated forms, application forms, CAM, sanction letters, release order letters, and RC reports.
Admin Panel: Enabling master upload functionality, user management, and seamless integrations with KYC verification, credit score checks, and messaging services.
Loan Management System (LMS) Features
Synoriq's LMS is a robust platform ensuring the smooth and efficient management of vehicle loans:
NPA Management: Classifying assets based on stringent criteria, handling DPD posting, and implementing provisioning norms for different loan types.
Repayment Management: Managing pre-EMI in case of tranche disbursements, generating repayment schedules, and handling NACH and PDC management.
Charges Management: Accrual accounting for loans and cash-based accounting for charges, with auto posting of bounce charges and computation of charges on foreclosure.
Collateral Management: Ensuring collateral dedupe, CERSAI reporting, LTV calculations, and facilitating top-up loans on the same collateral.
Rescheduling: Supporting part-payment, installment changes, rate changes, tenure changes, and moratoriums.
Tranche Disbursement: Offering flexible configurations for interest-only or principal interest disbursements.
Knock Off: Implementing auto knock-off processes through excess money, receivable to payable knockoffs, and reversals.
Synoriq's Vehicle Suite is not just a solution; it's a journey through efficiency, agility, and comprehensive support. As the vehicle finance industry evolves, Synoriq stands ready to empower financial institutions to meet growing demands and capitalize on opportunities presented by the diverse landscape of vehicle loans.