Pre-owned Truck Finance: a way to generate both social benefits and financial returns

The business of financing pre-owned trucks has given stellar returns and attracted investments from both private equity and Development Finance Institutions (DFIs)1. It still has immense potential in a large and growing, but highly unbanked economy like India. The higher risk in providing capital to the unbanked single truck owner, who does not have access to credit from institutions is compensated by the higher interest spreads due to ability to raise capital cheaply from DFI, securitization of portfolios and the satisfaction of doing social good by lending at rates lower than that provided by private/individual financiers.

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