Hey Uday,

While giving out a user vehicle loan, valuation of the vehicle is done. Firstly, NBFC appraises the vehicle basis its own grid which depends on age of vehicle, model, condition etc. Secondly, an independent valuer is appointed which values the vehicle being financed. Lower of these two is taken as vehicle value. In our article, we have taken this valuation as base and further applied 0.8% monthly depreciation (~10% yearly) to project future value of vehicle

the base valuation is adjusted as per condition of the loan and over than depreciation is applied and normally CVs have life of upto ~15 years