At a time when the auto sector is facing a prolonged slump with revival in demand seeming distant, several automobile majors are now exploring the option of leasing out new cars. A notable name in the segment, however, is OTO Capital, India’s first car-leasing start-up, which focuses on realising the customers’ dream of owning their favourite cars without digging deep into their pockets.
OTO Capital, founded in 2018 by two IIT-Mumbai alumni, Sumit Chhazed and Harsh Saruparia, offers flexible financing models to own cars and two-wheelers, by partnering with banks and non-banking financial companies (NBFC). It stands to serve not only the customer, who can avail the benefits of leasing a car, but also the banks, which get to cater to new age buyers who are otherwise reluctant to get into traditional loan-payment phase.
From credit underwriting to insurance, maintenance and even resale of the vehicle, OTO has its customers all covered. “With the slowdown in the automobile sector, partnering with OTO gives car loan departments of banks an opportunity to quickly move into car-leasing without any change in their internal processes. OTO is enabling banks and NBFCs to serve a newer and wider set of customers who were earlier shying away from car loans,” said OTO Capital co-founder Chhazed.
A dream car in 30 minutes
OTO claims that it has also simplified the process of owning a car. A customer simply has to reach one of its partnered car centers, pick his chosen vehicle, submit his KYC documents, pay a security document and take the car home. The leasing period is usually three-to-five years for EMIs, which are usually 30 per cent lesser than the average bank car loans. After the leasing period is over, the customer is given the option of giving up the car, upgrading to another one, or simply keeping the vehicle by paying the remaining amount.In India, the car-leasing segment is nascent with only 1 per cent of market penetration, which also offers huge opportunities for the tech-based start-ups in the space.
“Car-leasing is a huge gap in the Indian auto industry. OTO is ushering in a new, long-term growth lever for the automobile sector. Several car buyers need flexibility and medium-term options rather than just short-term rentals or permanent choices,” said Sanjay Swamy, managing partner, Prime Venture Partners, which recently announced its investment of `10 crore in OTO.
The sluggish car sales in India in the recent past, as per analysts, have also been due to the shift in the buying patterns of customers — from permanent ownership to car subscription or leasing for a shorter period. In the US, however, nearly 30 per cent of the cars are leased.
“The initial customer traction we have achieved in a short time reinforces our belief in this space and we are on a mission to make vehicle ownership more hassle-free,” said Chhazed.