The company will now offer car loans and personal loans to buyers beyond its platform, and will also help customers track and improve their credit scores through its newly launched platform, Loans24.
“Car buying is not a beautiful process in India, which we’ve been trying to solve for the last few years,” said Ruchit Agarwal, cofounder and CFO at Cars24.
“If someone is buying a car through our platform, we bundled the loan along with it. We also innovated a few things, for example, in 2023, we launched 100% loan to value, which means you could buy a ₹5 lakh car for ₹5 lakh loan, you don’t have to pay anything. But it was all limited to the cars that people are buying from our platform,” Agarwal explained.
The company received feedback from consumers asking why similar financing options weren’t available for cars purchased outside its platform. “That’s how we came up with this whole idea of Loans24. Under this, we want to go back to making car ownership very simple and affordable for everyone,” he said.
Since 2019, Cars24 Financial Services Private Ltd (CFSPL) has enabled over ₹4,000 crore in car loans for customers purchasing through CarsS24, according to the company. With the new initiative, it aims to disburse ₹2,000-2,500 crore in loans annually, specifically for used cars.
Navigating a slowing used car market
The move comes as startups in the used car market continue to struggle with muted growth and high losses, looking for growth in newer segments. Cars24’s revenue from operations increased by 25% to ₹6,917 crore in FY24, compared to ₹5,530 crore in the previous year. Its losses, however, increased about 6% to almost ₹500 crore.
In 2023, the company closed some international geographies owing to high burn. In the last 18 months, the Gurugram headquartered company has focused on launching new services like on-demand driver, insurance, repairs and maintenance, and RTO assistance.
Cars24’s direct competitor Spinny’s revenue also increased 14% to ₹3,725 crore in FY24 from ₹3,260 crore in FY23 even as its losses narrowed 28% to ₹590 crore.
The Indian used car market, once growing at 15-18% annually, has now slowed to single-digit growth, while financing in the sector is facing rising NPAs of 4-5%, driven by economic uncertainties and shifting consumer preferences, according to Amit Sharma, general partnerof Cactus Partners, a venture capital fund focused on technology startups.
Beyond car loans, the company is currently doing pilots for personal loans and will launch it officially in a few months, according to the CFO.
Unlike car loans, personal loans require underwriting only the consumer, making the process simpler, he noted. “We do not intend to venture into small ticket size loans…with the egregious loss rates. But our buyers are car buyers. They want to defer, let’s say, partial payment of a car through a personal loan, so no one is looking for a ₹10,000 loan,” he said.
Agarwal admitted that the interest rates will not be as competitive but the company is focusing on innovation. “We tend to opt for around 15% return on investment (ROI). For us, the competition will never be on RoI (return on investment), but on speed,” he said.
Beyond car loans
Even as the used cars market sees subdued sentiment, personal loan demand continues to expand, with retail credit growing at 15-18% CAGR, yet nearly 70% of Indians remain outside the formal credit system, Sharma said.
“This contrast explains why platform players are pivoting—financial services offer a pathway to monetization beyond transaction-driven revenues. It is reasonable for these players to leverage their access to clients and build an incremental revenue stream in a growing market,” he added.
Sharma also noted that while access to real-time customer insights such as income trends, repayment behaviour, and purchase patterns can enhance underwriting models and risk assessment, lending is fundamentally different from marketplace businesses.
“Success will depend on their ability to build strong risk frameworks, manage capital efficiently, and navigate evolving regulatory oversight in a sector that demands prudence. If executed well, this move could transform them into a strong fintech player while keeping the core of auto commerce player,” he said.
Also read: Indian auto sales stumble in H1 FY25, industry body tempers full year sales forecast