Automotive Loan Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, 2018-2028FSegmented By Vehicle Type (Two-Wheeler, Passenger Car, Commercial Vehicle), By Provider Type (Banks, NBFCs {Non-Banking Financial Companies}, OEM {Original Equipment Manufacturer}, Others {Fintech Companies}), By Percentage of Amount Sanctioned (Less than 25%, 25-50%, 51-75%, More than 75%), By Tenure (Less than 3 Years, 3-5 Years, More than 5 Years), By Region, Competition
The global automotive loan market is witnessing robust growth due to different factors such as changing preferences towards a modern lifestyle. This includes replacing old models with modern ones to improve the driving experience, leading to an increase in automotive sales, particularly in metro cities. Consequently, the rise in transportation activities due to industrialization has resulted in more consumers seeking automotive loans. These are some of the reasons driving the demand for automotive loans across the globe during the forecast period.
Automotive loans are provided by various financing companies to help individuals purchase vehicles. Generally, the lender lends the money, and the borrower is required to repay the loan in equated monthly installments (EMIs) over a defined tenure at a specific interest rate. There are different segments of automotive loans based on the type of vehicle. For example, a two-wheeler loan helps individuals buy motorcycles and scooters and pay for them later with EMIs. Passenger cars include hatchbacks, sedans, SUVs, and MPVs. Commercial vehicle loans provide money to borrowers so they can purchase vehicles for business or commercial use. Commercial vehicles include light, medium, and heavy commercial vehicles. The purchase of these vehicles is usually operated for commercial or industrial purposes and is financed by the services of commercial vehicle loans. Additionally, automotive loans are primarily provided through banks, non-banking financial companies (NBFCs), original equipment manufacturers (OEMs), and others (fintech companies) over a specified tenure and interest rate.
According to a report by the Federal Reserve in the United States, around 35% of Americans depend on loans to pay for cars. Moreover, Americans' total consumer debt consists of 9.5% of auto loans. According to the MarkLine 2021 report, automotive sales in the United States are around 15.05 million, China's automotive sales are 26.25 million, and Germany's automotive sales are 2.62 million. Data shows that Americans have trillions of dollars in auto loan debt due to high auto loan interest rates. In 2022, according to the Federal Reserve Bank of New York's quarterly report on household debt and credit, Americans currently owe USD 1.52 trillion in automotive loans. Therefore, the above-mentioned data shows that despite being in debt, Americans are still buying vehicles through loans, which is driving the automotive loan market.
Commercial Vehicle Loan Fuels Market Growth
During the forecast period, significant expansion is anticipated in the commercial vehicles segment. Commercial vehicles are more expensive than other types of vehicles, so many banks and financial institutions have developed affordable loan plans with transparent terms and conditions. Additionally, approving loans for commercial vehicles requires less time than loans for personal vehicles. Hence, with the rise in commercial vehicle sales, the demand for commercial vehicle loans is also rising. For instance, in 2022, around 12.05 million commercial vehicles were sold in the United States, while 3.3 million passenger cars were sold. Therefore, the above-mentioned factors are expected to support segment expansion. The expansion of the market is also being fueled by the increased demand for light commercial vehicles, which offer adaptable performance in different conditions.
Expansion of Mobile and Web-Based Platforms Fuels Market Growth
Online lending services are one of the most innovative technologies currently gaining popularity in the automotive loan market. Applications for smartphones and web platforms that allow users to borrow money from lenders are easily available. In comparison to traditional financing options, web- and mobile-based platforms help individuals in applying, evaluating, and assisting for loan services. Additionally, with the rise in fintech platforms, automotive loans are simplified by enabling end-to-end digital loan approval, processing, and payment. The fintech industry is radically changing the landscape of the finance industry worldwide in a number of ways. Some of the main attributes of the fintech industry are credit access, enhanced transaction speed, efficiency, refinancing, and transparency. Therefore, the above factors are also fueling the market growth of the automotive loan industry across the globe.
Banks are Gaining Significantly More Prominence Globally which is Driving Market Growth
Automotive loans allow individuals to buy vehicles by borrowing money to pay the seller. Due to the lower interest rates offered by banks and the trust that customers have in banks, banks are considered to be the most preferred financing options by borrowers. Therefore, banks dominated the previous years and are expected to continue to dominate the automotive loan market throughout the projected period. Auto financing penetration in passenger vehicles grew from 75% at the beginning of 2020 to almost 80% in 2021. Due to the wide range of auto loan alternatives offered by banks, banks offer consumers the option for pre-approval. Previously, banks offered loans between 70 and 80% of the total cost of the vehicle. However, these banks are now providing 100% loans for the vehicle. This feature helps customers compare estimated loan offers, which is also beneficial for them. Therefore, the various benefits offered by banks will grow the automotive loan market globally.
Market Segmentation
The global automotive loan market is segmented on the basis of vehicle type, provider type, percentage of amount sanctioned, tenure, region and competitive landscape. Based on vehicle type, the market is divided into two-wheeler, passenger car, and commercial vehicle. Based on the provider type, the market is segmented into banks, NBFCs (non-banking financial companies, OEM (original equipment manufacturer), and others (fintech companies). Based percentage of amount sanctioned, the market is segmented into less than 25%, 25-50%, 51-75%, more than 75%. On the basis of tenure, the market is segmented into less than 3 years, 3-5 years, more than 5 years. On the basis of region, the market is divided into North America, Europe, Asia-Pacific, South America, and Middle East & Africa.
Company Profiles
Ally Financial Inc.; Bank of American Corporation; Daimler Financial Services; Capital One Financial Corporation; Ford Motor Credit Company; GM Financial Inc.; Mitsubishi HC Capital UK PLC; General Motors Financial Company, Inc.; Toyota Financial Services; JPMorgan Chase & Co. are among the major players driving the growth of the global automotive loan market.
Report Scope:
In this report, the global automotive loan market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:
- Automotive Loan Market, By Vehicle Type:
- Two-Wheeler
- Passenger Car
- Commercial Vehicle
- Automotive Loan Market, By Provider Type:
- Banks
- NBFCs (Non-Banking Financial Companies)
- OEM (Original Equipment Manufacturer)
- Others
- Automotive Loan Market, By Percentage of Amount Sanctioned:
- Less than 25%
- 25-50%
- 51-75%
- More than 75%
- Automotive Loan Market, By Tenure:
- Less than 3 Years
- 3-5 Years
- More than 5 Years
- Automotive Loan Market, By Region:
- North America
- United States
- Canada
- Mexico
- Europe
- Germany
- France
- United Kingdom
- Italy
- Spain
- Asia-Pacific
- China
- India
- Japan
- South Korea
- Australia
- Middle East & Africa
- Saudi Arabia
- UAE
- South Africa
- Turkey
- South America
- Brazil
- Argentina
- Colombia
Competitive Landscape
Company Profiles: Detailed analysis of the major companies present in the global automotive loan market.
Company Information
- Detailed analysis and profiling of additional market players (up to five).
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