Retail Vehicle Financing and Loan Processing in the Indian Automobile Sector: A Process-Based, Theory-Grounded Study of Dealership-Level Practices

Author

Muskan Shah, Dr. Sarita Agarwal


Abstract

 Retail vehicle finance underwrites the great majority of new-vehicle purchases in India, yet the dealership-level process by which a customer's requirement becomes a disbursed loan is rarely documented in the academic literature, which instead concentrates on macro-level credit-market theory, portfolio-level default studies, or algorithmic credit-scoring models. This paper addresses that gap through a process-based, theory-grounded study conducted at Kundan Hyundai, an authorised Hyundai Motor India Limited dealership, during May–August 2026. Drawing on nineteen sources spanning credit-rationing theory, financial-intermediation theory, loan-pricing mechanics, digital-underwriting developments and Indian financial regulation, the study documents the end-to-end sequence from customer profiling and lender-policy screening through documentation, credit and banking assessment, loan login, EMI computation, approval, disbursement and post-disbursement coordination (insurance, RTO and NACH formalities). The observed process is illustrated, for expository purposes only, with a constructed set of fifty illustrative, hypothetical finance cases that are not actual transaction records and are not presented as empirical findings. Findings indicate that documentation and credit-appraisal practices differ systematically by customer profile (salaried, self-employed and commercial/permit) and by lender type (bank versus NBFC), that turnaround time and pricing vary materially between these lender categories, and that EMI outcomes are highly sensitive to tenure and benchmark-linked spread. The paper concludes that the observed process is a coherent, theory-consistent implementation of established credit-market principles rather than an ad hoc routine, and offers practical recommendations for process standardisation alongside directions for future empirical research using genuine transaction-level data.



Keywords

retail vehicle finance; automobile loan processing; NBFC; CIBIL; EMI; credit rationing; financial intermediation; dealership finance; External Benchmark Lending Rate



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References


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