India Quotient invests in online lending startup CreditMate

CreditMate, an online lender focused on the used two-wheeler market in India, has secured $500,000 (Rs 3.3 crore) in seed funding from early stage investment firm India Quotient.

The company will use the capital on market expansion and technology enhancement, Aditya Singh, co-founder of CreditMate told Techcircle.

CreditMate, co-founded by Ashish Doshi, Jonathan Bill, and Aditya Singh, launched operations three months ago in Mumbai and expanded to Pune recently. The company is looking to expand its services to more cities across the country.

The startup, which uses data-driven algorithms, allows users to enter their preferred bike and their monthly income and the website then tells them their monthly EMI and loan repayment period.

Users can choose their bike/scooter and pay a token amount to the dealer to secure the bike. They can then avail CreditMate loan and EMI options. Users need to submit their applications and relevant documents, which the company claims will be pre-approved within three hours and then visit the dealer to sign the loan agreement. After this, the company claims that users can take possession of their vehicle within one to two working days.

"The used bike market in India has huge potential, we believe it will follow the used car market to move to a more formal, organised and structured sector. Like the used car market, this will be driven by the availability of finance and as a result more structured dealerships," Bill said.

Owned and operated by Urja Money Pvt Ltd, the company currently has partnered with over 25 dealers in Mumbai.

While not many companies in India operate on CreditMate's model of focussing exclusively on used two-wheeler loans, a number of non-banking financial companies (NBFCs) do offer such loans.

Shriram Housing Finance Ltd, the subsidiary of the private equity-backed Shriram City Union Finance, is one of those NBFCs offering loans for pre-owned two wheeler purchase.

Hero FinCorp Ltd had recently announced that it will enter new product segments such as loans for housing and used two-wheelers by 2020. The announcement was made when the company raised Rs 702 crore ($105 million) from private equity firm ChrysCapital and Swiss financial services firm Credit Suisse to fuel expansion.

Both automobile giants as well as new-age startups see huge opportunities in India's emerging pre-owned two wheeler market. Some estimates say the market is worth at least $8 billion and some say the sale of used two wheelers account for about 15% of overall sales.

Seeing the opportunity, Honda Motorcycle & Scooter India (HMSI), the second largest two-wheeler player, recently said it will double the number of its 'Best Deal' outlets to 200 by the end of 2018. Best Deal is the first and the only organised retail set-up exclusively for certified Honda pre-owned two-wheelers.