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What are the risks involved in vehicle loans and how are they structured?

With good returns comes a little risk. Anything that offers you better returns than an FD comes with some risks involved. The best an investor can do is choose the one where the mitigation of risk is the highest.


Our products like Wint Wheels Mar-21 provide good returns(10.25% p.a.) and helps in diversifying your portfolio. But there are certain risks involved, foremost being “Fraud Risk.”


For example, In the asset, Wint Wheels Mar-21, the underlying collateral was vehicle loans, and the most common question that we got is what if the vehicle does not exist in the underlying pool. This will eventually lead to a fraud risk. To mitigate such risks, we only picked those loans that met our criteria.


Our in-house audit team verified each vehicle loan in the underlying pool.


While verifying the vehicle loans, we look at all these crucial details:


The audit team checked each vehicle detail through the “Vahan Database” available to everyone. Vahan is a govt website for all vehicle databases, which is available for everyone to see.


Here, we can ascertain the following data: 

  • The name of the borrower;
  • The vehicle brand name (Manufacturer and model of the vehicle financed);
  • Name of the financier (Kogta Financial (I) Limited in our case);
  • Engine number and chasis number of the vehicle financed (These numbers are unique to each vehicle);
  • If the financed Vehicle is new, the sanction year of the loan should be the same as the Vehicle’s registration year.


We also verified the KYC (e.g., PAN, Voter ID, Driving Licence, etc.) of the borrower through the government database.


Over and above this, we physically verify the KYC, sanction amount, outstanding loan amount, number of EMIs paid by the borrower and vehicle registration number, which helps us verify the borrower and also helps us to ascertain if the loan account is performing or not.