From featuring nowhere in the global market for cab aggregators in 2013, India suddenly skyrocketed to becoming the largest market in 2016, after China and North America. Why is this industry peaking? How are individuals and small businesses making money from this trend? Is it really possible to get a guaranteed taxi loan approval? Read on to find out.
More People Opting for Taxis
An increasing number of Indians, especially those living in the metropolitan cities, are switching to using app-based taxi services mainly because using other means of public transportation is way too tiresome. Buses are crowded beyond their normal capacity and auto-rickshaws are difficult to hail. Being repeatedly refused a ride based on where you need to go can be ever so frustrating.
Cab apps are offering convenience at your fingertips. They offer different sizes of vehicles at varying price points. Now one even has the option of sharing a cab, for a fraction of what it would cost to ride alone. This has made the cost of taking a taxi comparable to taking other modes of transport. There are many advantages of using these cab services. They provide point-to-point connectivity. So, you’re picked up from your doorstep, rather than having to walk to a bus stop or auto-rickshaw stand. You’re protected from the crowds as well as the fumes and dust of the Indian roads. Moreover, these cabs are clean and comfortable. If safety is your concern, you can have a friend or family member track your travel, with the help of the app.
Prompt, cost-effective and courteous cab services by new-age taxi providers are encouraging a large proportion of daily travelers as well as people going on holidays, for late night outings or to the railway station or airports to switch to using them.
Why People are Looking for Taxi Finance
The number of people seeking taxi finance has risen sharply over the past couple of years. Here’s a look into the prospects of the cab market in India to understand the sudden rise in demand for taxi car loans
Ola has 300,000 taxis in more than 100 cities in India and over 1 crore downloads of its Android app for smartphones. Uber claims to have similar numbers. These companies have not only revolutionized traveling, but also offer an easy way for people to make some additional money. These cab companies are providing car owners with an online platform that links them to people seeking cabs.
Several individuals have sought taxi finance to purchase a car, hired a driver and linked to the Ola or Uber network, with hopes of supplementing their regular incomes with earnings from the service. Many individuals have also started small businesses, owning a few cars of different sizes and tying these up with Ola and Uber taxi services.
India had a population of 1.3 billion. Of this, almost 35% are already using the internet for various purposes. Although this is a significant figure, it is well below China’s internet penetration of 60%. The level of penetration achieved by China and the rate at which India’s internet usage is growing indicate substantial growth in the years to come. In fact, India is expected to add at least 50 million internet users annually until 2020, according to the telecom minister.
These trends suggest growing demand for cab aggregators. The Indian market for cab aggregators is projected to surge to around $7 billion by 2020, according to figures published by Softbank.
The Big Fat Lie
Once you’ve decided to buy a taxi, you need to think of ways to fund its purchase. Statements made or advertisements claiming to offer “guaranteed” taxi loan approvals are often misleading. There are claims of preapproved taxi loans, suggesting that the loan approval is guaranteed. These are simply marketing gimmicks being used to entice prospective loan seekers.
While car or taxi loans are easy to access, these are based on certain conditions and there’s no guarantee that one will be approved. The approval would be based on the fulfillment of certain conditions. Traditional providers of taxi finance may ask for a few or all of these:
- A valid diver’s license
- A permit to operate the vehicle as a taxi
- Proof of association with a taxi operator
- Funds to pay a certain proportion of the vehicle price as down payment
Fintech companies are now offering taxi finance without the long, tedious application procedure of the traditional banking institutions. In fact, there are specialized products for providing loans meant for purchasing a car that would be linked to the network of a taxi aggregator.
Here are some of the things that one can consider when applying for a taxi car loan
- Check the down payment requirement and make sure it is the lowest in the industry.
- If the lender has collaborated with taxi aggregators, the repayment instalments can be linked to the earnings from the aggregator.
- There should be flexibility in repayment, with weekly or monthly instalments.
- The taxi finance application process should be online, with minimal documentation required.
- There should be no pre-closure or prepayment charges.
Fintech lenders are offering specialized products to encourage an increasing number of people to become financially independent and upgrade their lifestyles. With the easy availability of finance and flexible repayment options, taxi drivers can buy their own vehicles rather than driving vehicles owned by others.
While more lenders are now offering taxi finance, the actual sanction is dependent on the eligibility of borrowers and their ability to repay. Since Fintech companies link repayment to the earnings from taxi aggregators, these loans are relatively easier to acquire.