India’s Car Buyers Still Wait on Loans While the West Goes Digital, Bankers Say

Car buyers in India still face delays dealing with multiple lenders at the point of purchase — a friction that developed markets have largely eliminated through embedded, digital financing, according to industry leaders at FADA’s 5th Finance and Insurance Summit 2026 in Mumbai.

Rajan Pental, executive director at Yes Bank, said the auto finance industry has offered loans purely as instalment products without building a truly embedded alternative. Customers today, he noted, walk into dealerships already well-informed about the car they want, yet the transaction still slows down because of the multiplicity of lenders involved.

In contrast, Pental said, developed markets already offer fully digital embedded credit through dealers or online configurators, with instant approval, e-signatures and financing tied directly to the vehicle order. Europe and the US are moving further still, toward platform-led models where banks integrate directly into OEM, dealer and marketplace systems rather than selling standalone loan products.

India’s auto finance market remains dominated by conventional loans, with leasing making up about 1.5% and subscription models just 0.1%. Pental urged the industry to design financing schemes around individual pin codes instead of relying on flat ex-showroom pricing, arguing that banks’ technology capabilities could be used to serve pre-approved borrowers more seamlessly.

FADA president C S Vigneshwar described finance and insurance as the ‘load bearing walls’ of dealership viability, while Raul Rebello, MD and CEO of Mahindra Finance, said the industry has scaled up enough that rural and urban sales are converging, pointing to co-lending as an emerging area of innovation given how many financiers now operate at a single dealership.