UP Leads India’s Used Car Loan Growth at 32.6% CAGR
By Business Desk
Uttar Pradesh leads India’s used-car loan market with a 32.6% CAGR. Explore the boom, opportunities, and credit risks for first-time borrowers.
If you’re considering a used car, you might be interested to know where financing for these vehicles is expanding most rapidly across India. Uttar Pradesh has emerged as the leading major market for used-car loans, with its portfolio growing at an impressive 32.6% annually over five years through June 2026, according to CRIF High Mark.
Key Growth Figures for Used-Car Financing
- Uttar Pradesh’s used-car loan portfolio saw a 32.6% five-year Compound Annual Growth Rate (CAGR) through June 2026.
- Karnataka followed with a 31% CAGR, and Telangana reported 29.7% growth.
- Nationally, used-car financing is the fastest-growing segment, expanding at a 26.2% five-year CAGR between June 2021 and June 2026.
- The number of borrowers across India increased 2.4 times in this period.
This boom in used-car financing signals a significant shift, drawing more consumers into the formal credit sector for pre-owned vehicles. A substantial 75% of new used-car loan originations are from individuals who are taking out this product for the very first time.
Understanding the Emerging Credit Risks
While this growth presents exciting opportunities, it also brings a heightened focus on managing credit risk. Nationally, used-car loans recorded a PAR 31–90 delinquency rate of 3.1%, which acts as an early warning sign for potential repayment challenges.
- Uttar Pradesh reported a PAR 91–180 delinquency of 1.3%.
- Both Karnataka and Telangana registered a 1% PAR 91–180 delinquency.
- The proportion of multi-loan used-car borrowers, those with two or more active loans, increased from 4.8% to 6.7% over five years.
This data suggests that formal credit for used vehicles is reaching beyond just big cities, making it accessible to more people in wider regions. For lenders, it means carefully balancing this rapid expansion with strong underwriting, as a cheaper used car doesn’t necessarily ease the pressure of repayment, especially if you already have multiple loans.
Keeping an eye on these delinquency trends while the market grows will be crucial for both lenders and borrowers navigating the evolving landscape of used-car financing in India.