India Vehicle Finance Booms: 20.10% Growth Driven by Used Cars

India’s vehicle finance market has demonstrated significant expansion, registering a compounded annualised growth rate (CAGR) of 20.10% between June 2021 and June 2026. This robust performance is detailed in a new report from CRIF High Mark, titled ‘Wheels & Ambition: A Research Report on India’s Vehicle Finance Landscape’.

Key Growth Metrics

• Overall vehicle finance CAGR: 20.10% (June 2021-June 2026)
• Vehicle finance share of total retail credit portfolio: 11.40%
• Originations increase year-on-year in Q1 FY27: 17.10%

The market has seen a notable shift in its composition. While auto loans’ share in the broader retail credit landscape slightly decreased, segments like commercial vehicle, two-wheeler, and used car loans have gained significant traction.

Auto Loan Evolution and Premium Segment Growth

Auto loans, despite a marginal shift in market share, still recorded a substantial 17.60% CAGR over the five-year period. This growth is increasingly fueled by a rising preference for premium models among consumers.

• Average auto loan ticket size in Q1 FY27: Rs 8.60 lakh
• Auto loans exceeding Rs 15 lakh now constitute 29.80% of total originations.

Two-Wheeler Loans Expand Borrower Base

The two-wheeler loan segment experienced a 19.70% CAGR, effectively broadening the overall borrower base. This expansion highlights accessibility and demand within this specific vehicle category.

• New-to-product customers in two-wheeler loans: 80%
• Loans above Rs 1 lakh accounted for 43% of two-wheeler originations in Q1 FY27.

Surge in Used Car and Commercial Vehicle Finance

Used car loans emerged as the fastest-growing segment, demonstrating a remarkable 26.20% CAGR over five years. This indicates a strong demand for pre-owned vehicles and accessible financing options.

Commercial vehicle loans also showed robust growth, with a 20.10% CAGR, marked by a significant uptick in lending for mid-range loan values. However, this segment also presents distinct risk factors for lenders.

• New-to-product borrowers in used car originations: 75%
• Highest early-stage delinquency (PAR 31-90) for commercial vehicles: 4.10% in June 2026

Borrower Demographics and Risk Management

The report identifies specific borrower demographics as more reliable for auto loans. Individuals aged 31-40 and 41-50 were found to be stronger segments, indicating lower risk profiles.

Conversely, younger borrowers, specifically those aged 30 or below, exhibited a higher delinquency rate. This suggests a need for more cautious assessment in this age group.

• Younger borrowers (30 or below) PAR 91-180 delinquency rate: 1%

To mitigate potential risks, the CRIF High Mark report advises lenders to closely monitor several key indicators. These include an increase in higher ticket sizes, the prevalence of multiple loans, and the overall rising debt per borrower across the market.