Chile Auto Finance Market Outlook to 2029

The report titled “Chile Auto Finance Market Outlook to 2029 – By Vehicle Type, By Lender Type (Banks, NBFCs, Captives), By Tenure of Loan, By Age Group of Borrowers, and By Region” provides an in-depth analysis of the auto finance industry in Chile. The report includes a comprehensive overview of the sector’s genesis, current market size based on loan disbursement and outstanding credit, key market segmentation, evolving consumer behavior, regulatory framework, recent trends, digital innovation, and competitive landscape. It concludes with a future outlook, projected market size, key opportunities, potential bottlenecks, and profiling of major players within the auto finance ecosystem.

Chile Auto Finance Market Overview and Size

In 2023, the Chile Auto Finance Market was valued at CLP 6.2 Trillion in terms of loan disbursements. The market is being propelled by rising vehicle ownership, favorable interest rate policies, and strong participation from both public and private financial institutions. Major lenders such as Banco de Chile, Santander Consumer Finance, Forum Servicios Financieros, BCI Auto, and Scotiabank are actively shaping the landscape through customized financial products, partnerships with dealerships, and expanding digital loan disbursal platforms.

In 2023, Forum Servicios Financieros introduced a digital loan approval system in partnership with local dealerships, cutting average processing time by 35% and improving conversion rates. Santiago and Valparaíso are key hotspots due to urban density and high vehicle registration rates.

Market Size for Chile Auto Finance Industry Based on Loan Disbursed in USD Billion, 2018-2023 (CLP Trillion)

What Factors are Leading to the Growth of the Chile Auto Finance Market:

• Macroeconomic Recovery and Urban Mobility Demand: The post-pandemic recovery and government support schemes have stimulated consumer demand, particularly in urban centers. In 2023, new car registrations grew by 7.2% YoY, directly impacting auto loan issuance.

• Increased Role of Captive Finance Arms: Automakers are strengthening their in-house financing arms. Brands like Toyota Chile and Chevrolet Servicios Financieros have aggressively expanded zero-interest and flexible EMI products, particularly for EV and hybrid models.

• Digital Loan Platforms and API Integrations: Over 45% of auto loan applications in Chile are now initiated through online platforms, supported by APIs integrating dealership networks and credit scoring algorithms. This trend has reduced loan turnaround time from 4 days to under 48 hours, enhancing accessibility for younger borrowers.

Which Industry Challenges Have Impacted the Growth for Chile Auto Finance Market

• High Default Risk Among Lower-Income Borrowers: One of the most persistent challenges in Chile’s auto finance landscape is the high default rate among lower-income segments. As of 2023, approximately 28% of loan defaults in the auto finance space were traced to borrowers in the bottom two income quintiles. This trend has led many lenders to tighten credit eligibility norms, which in turn reduces access to auto finance for a large portion of the population.

• High Cost of Credit and Inflation Pressure: Despite moderate interest rate levels compared to regional peers, the effective cost of credit in Chile remains elevated due to add-on insurance products, administrative fees, and inflation-indexed repayments (UF-based loans). In 2023, the average effective interest rate exceeded 13% for used vehicles, making loans unaffordable for many. The burden of inflation has further reduced household purchasing power, affecting overall auto loan demand.

• Limited Penetration in Rural and Low-Density Regions: While urban centers like Santiago and Valparaíso are saturated with lender coverage, auto finance penetration remains below 25% in rural regions such as Araucanía and Maule. This urban-rural divide is due to limited branch presence, weak dealership networks, and lack of digital literacy, resulting in missed opportunities for financial inclusion.

What are the Regulations and Initiatives which have Governed the Market:

• Financial Consumer Protection Law (Ley N° 20.555): This law ensures transparency in loan terms, including interest rates, total cost of credit, and repayment schedules. Lenders are mandated to provide clear disclosures in loan contracts. In 2023, over 92% of complaints received by SERNAC related to auto loans were resolved in favor of the consumer, reflecting growing enforcement of these protections.

• Central Bank Interest Rate Guidelines and UF-Linked Loans: The Central Bank of Chile regulates benchmark rates that influence auto loan offerings. Many auto loans are structured in Unidad de Fomento (UF), a CPI-indexed unit that helps lenders mitigate inflation risk but increases repayment volatility for borrowers. This structure, though stable for lenders, creates affordability challenges when inflation spikes.

• EV Financing Support and Green Credit Programs: In line with Chile’s National Electromobility Strategy, the government, in partnership with multilateral banks, has initiated green auto loan subsidies. These include interest rate subventions and partial guarantees for EV financing through institutions like BancoEstado. As of 2023, electric vehicles accounted for 2.4% of all financed vehicles, a figure projected to grow with increasing fiscal support.

Chile Auto Finance Market Segmentation

• By Market Structure: Banks dominate Chile’s auto finance sector due to their well-established trust, widespread branch presence, and ability to offer competitive interest rates, especially for prime borrowers. Banks like Banco de Chile and Santander have strong partnerships with leading auto dealerships, offering bundled insurance and flexible tenures. Captive finance companies (such as Forum Servicios Financieros and Chevrolet Servicios Financieros) are gaining traction, particularly for new vehicles, due to preferential financing schemes, zero down-payment options, and brand-backed loyalty programs. Non-Banking Financial Companies (NBFCs) or multiservice lenders cater mainly to subprime borrowers and used vehicle segments, offering higher approval rates but at elevated interest costs.

• By Vehicle Type: New vehicles account for a larger share of auto financing in Chile, driven by better loan terms, lower interest rates, and availability of manufacturer incentives. However, the used vehicle finance segment is witnessing growth due to affordability and rising used vehicle imports from Asia and the U.S.
  Used vehicle loans typically have shorter tenures and higher interest rates but offer flexibility for middle-income and younger borrowers.

• By Loan Tenure: Auto loans with 48–60 months tenure dominate the Chilean market as they strike a balance between manageable EMIs and overall interest burden. Shorter tenures (24–36 months) are more popular for used vehicles and among affluent borrowers aiming to minimize interest payments.

Competitive Landscape in Chile Auto Finance Market

The Chile auto finance market is moderately concentrated, with a mix of large commercial banks, captive financing arms of OEMs, and a few non-banking financial entities shaping the industry. In recent years, the sector has seen increased competition through the introduction of digital loan origination platforms, integration with automotive marketplaces, and expansion of EV-focused financing schemes. Leading players include Banco de Chile, Santander Consumer Chile, Forum Servicios Financieros, BCI Auto, Scotiabank, and emerging fintech-based lenders.

Some of the recent competitor trends and key information about competitors include:

• Banco de Chile: A market leader in auto loans, Banco de Chile disbursed over CLP 1.5 trillion in vehicle financing in 2023. The bank has expanded its digital auto loan pre-approval service, resulting in a 12% increase in loan conversion rates year-on-year.

• Santander Consumer Chile: Known for competitive EMI options and exclusive tie-ups with auto dealerships, Santander reported a 15% rise in new vehicle loan originations in 2023. Its digital loan calculator and instant approval model have improved its customer acquisition among millennials.

• Forum Servicios Financieros: As the captive finance arm of the Indumotora Group, Forum has a strong presence in dealership financing, especially for brands like Hyundai and Subaru. In 2023, Forum launched a partnership with online car marketplaces for instant financing approvals, capturing over 20% share in the new car financing segment.

• BCI Auto: BCI’s auto loan division has grown rapidly by offering flexible credit structures for both salaried and self-employed buyers. The firm reported 8.5% YoY growth in used vehicle financing in 2023 and has invested in a new AI-based risk profiling system.

• Scotiabank Chile: A key player in the premium car financing segment, Scotiabank has seen increasing traction through its bundled insurance products and EV-specific green loans. The bank financed over 4,200 EVs and hybrids in 2023, making it a leading financer in the sustainable vehicle space.

What Lies Ahead for Chile Auto Finance Market?

The Chile auto finance market is projected to experience steady growth through 2029, driven by urban population expansion, recovery in household income levels, increased digital adoption in financial services, and ongoing electrification in the automotive sector. The market is expected to grow at a moderate CAGR, with notable shifts in consumer preferences, financing models, and lender strategies.

• Acceleration in Electric Vehicle Financing: As part of Chile’s National Electromobility Strategy, the availability of EVs is set to rise significantly, supported by public-private partnerships. This will result in a growing demand for EV-specific financing products, including low-interest green loans and longer tenures tailored for high-ticket electric vehicles. By 2029, EVs are expected to account for over 8–10% of new vehicle finance volume.

• Digital Lending Ecosystem Expansion: The integration of AI-based credit scoring, open banking APIs, and dealership-fintech tie-ups will further digitize and accelerate the lending value chain. Over 70% of auto loan applications are projected to be processed digitally by 2029, reducing processing time and enhancing access, especially for younger and tech-savvy borrowers.

• Customized and Flexible Loan Products: Financial institutions are expected to increasingly shift toward personalized credit products, such as income-linked EMIs, usage-based repayment schemes, and hybrid balloon payments. These innovations will allow greater inclusion of gig economy workers and self-employed borrowers into the auto finance fold.

• Partnership-Driven Dealership Finance: OEMs and captive finance arms are likely to invest more in dealer engagement, offering integrated digital platforms that link vehicle selection, financing, and insurance. The emphasis will be on end-to-end digital onboarding and faster disbursal models, improving both customer experience and dealer conversion rates.

Future Outlook and Projections for Chile Car Finance Market Size on the Basis of Loan Disbursements in USD Billion, 2024-2029

Chile Auto Finance Market Segmentation

• By Vehicle Type:
  o New Vehicles
  o Used Vehicles
• By Finance Provider:
  o Banks
  o Non-Banking Financial Companies (NBFCs)
  o OEM Financing Companies
  o Fintech and Digital Lenders
• By Type of Buyer:
  o Individual Buyers
  o Corporate Buyers
  o Fleet Owners
  o Leasing Companies
• By Loan Tenure:
  o Less than 36 Months
  o 36–60 Months
  o More than 60 Months
• By Vehicle Fuel Type:
  o Petrol
  o Diesel
  o Electric
  o Hybrid
• By Age of Vehicle (Used Vehicle Financing):
  o 0–2 Years
  o 3–5 Years
  o 6–10 Years
  o Above 10 Years

• By Region:

  • Metropolitan Region (Santiago)

  • Valparaíso

  • Biobío

  • Maule

  • Araucanía

  • Antofagasta

Players Mentioned in the Report (Banks):

• Banco Santander Chile
• Banco de Chile
• Banco BICE
• Banco Estado
• Banco Ripley
• Banco Paris
• Banco Security

Players Mentioned in the Report (NBFCs):

• Santander Consumer Finance Chile
• Forum Servicios Financieros
• Tanner Servicios Financieros
• Mundo Crédito
• Global Soluciones Financieras
• Transbank

Players Mentioned in the Report (Captive):

• Toyota Financial Services Chile

• Volkswagen Financial Services Chile

• BMW Financial Services Chile

• Stellantis Financial Services Chile

• Hyundai Capital Chile

Key Target Audience:

• Commercial Banks and Financial Institutions

• Captive Auto Finance Providers

• Dealership Financing Networks

• Auto Insurance Providers

• Regulatory Bodies (e.g., Comisión para el Mercado Financiero - CMF)

• Automotive OEMs and Importers

• Digital Lending and Fintech Platforms

• Research and Policy Institutions

Time Period:

• Historical Period: 2018–2023

• Base Year: 2024

• Forecast Period: 2024–2029