Auto loans hold on to the most sought-after credit product tag

Tags: Banking

Enquiries made to Cibil spiked by 28% in the last quarter of 2012

Auto loans continue to be the most sought after financial product and have registered highest growth over the past three years. Number of auto loan enquiries made to Credit Information Bureau (Cibil) spiked by 28 per cent in the last quarter of 2012.

“More than 20 per cent of all enquiries made at Cibil by financial institutions for assessing new loan applicants are for auto loans,” said Arun Thukral, managing director, Cibil.

Post-2008 financial crisis, banks have tightened their credit policies and have reduced their exposure to unsecured debt, such as credit cards and personal loans. Even in case of home loans, which are the most secured ones due to the underlying asset mortgaged, banks are more cautious in giving housing loans to customers with a lower credit rating.

“Earlier while the banks used to give loans to entities with score of 600 out of 900 in the Cibil profile rating, now they are mostly preferring a higher rating of around 800,” said Thukral.

According to Cibil data, the main drivers of credit growth post June quarter of 2009 has been in the secured loans segment, like auto, two-wheeler and home loans.

The data also showed that auto loans have been on a rise in smaller cities in India over the past three years.

The smaller cities contribute to over 57 per cent of all auto loan enquiries and have shown the highest growth in number of auto loan enquiries in the past three years, Cibil said.

It said that while overall number of auto loans disbursed is growing, the average loan size has also been on the rise since the past three years.

While overall the number of auto loans disbursed is growing, the average ticket size of auto loans has also been continually on rise over the past three years. The national average ticket size for auto loans in the third quarter of 2012 was Rs 5.12 lakhs.

Cibil, India’s largest credit information bureau maintains credit information of more than 22 crore consumers and one lakh businesses. Cibil score helps borrowers gauge their current financial position and improve their chances of acquiring a loan.


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