FADA Summit: India’s Auto Finance Industry Wants Seamless, Embedded Car Loans

India’s auto finance industry needs to move toward embedded, digital lending built directly into the car-buying process, according to speakers at the Federation of Automobile Dealers Association’s 5th Finance and Insurance Summit 2026, held in Mumbai.

Rajan Pental, executive director at Yes Bank, said the industry has offered auto loans purely as an instalment product without ever building a fully embedded alternative. He noted that customers today arrive at dealerships already informed about the vehicle they want, only for the process to be slowed by having to navigate multiple lenders — a friction point that developed markets have largely eliminated.

In those markets, Pental said, lenders and OEM captives already offer fully digital embedded credit at dealerships or through online configurators, with instant decisions, e-signatures and financing tied directly to the vehicle order. Europe and the US, he added, are moving toward platform-led models where banks integrate directly into OEM, dealer and marketplace systems rather than selling standalone loans.

India’s auto finance market, however, remains dominated by conventional loans, with leasing at around 1.5% and subscription models at just 0.1%. Pental urged lenders to move past flat ex-showroom pricing and design schemes tailored to individual pin codes, pointing out that banks’ existing technology capabilities could be used to serve pre-approved borrowers more directly.

FADA president C S Vigneshwar called finance the ‘life blood’ of the industry and finance and insurance the ‘load bearing walls’ that keep dealerships financially viable, while Raul Rebello, MD and CEO of Mahindra Finance, said the sector has scaled to the point where rural and urban sales are converging, with co-lending offering fresh room for innovation given how many financiers now operate at individual dealerships.