The report, Wheels and Ambition: A Research Report on India’s Vehicle Finance Landscape, showed that growth has been accompanied by larger auto loans, wider credit penetration in smaller cities and towns, and rising borrowing in the commercial vehicle segment.
Overall vehicle-finance originations grew 17.1% year-on-year in the first quarter of FY27.
Used-car loans grow the fastest
Used-car loans recorded a compound annual growth rate (CAGR) of 26.2% between June 2021 and June 2026, the fastest among vehicle-finance segments covered in the report.
The number of borrowers in the segment increased 2.4 times during the five-year period, pointing to the growing use of formal financing for purchases of pre-owned cars.
New borrowers are also driving much of this growth. Around 75% of used-car loans originated in Q1 FY27 went to new-to-product borrowers.
Two-wheelers remain a gateway to formal credit
Two-wheeler loans continue to bring a large number of first-time borrowers into the formal credit system.
The borrower base increased from around 2.3 crore in June 2021 to 3.6 crore in June 2026. About 80% of borrowers in the segment were new-to-product, according to CRIF High Mark.
The numbers suggest that financing a two-wheeler remains one of the first interactions with formal lenders for many borrowers.
Car loan sizes are getting bigger
The auto-loan market is also seeing a shift towards larger loans.
Average exposure per borrower increased at a five-year CAGR of 9.2%, while the average ticket size of new auto loans reached ₹8.6 lakh in Q1 FY27.
The share of loans exceeding ₹15 lakh rose to 29.8% in Q1 FY27 from 27.6% in Q1 FY25, reflecting a growing share of higher-value vehicles in financed purchases.
Commercial vehicle loans see strong growth
Commercial vehicle finance was another fast-growing part of the market, recording a five-year CAGR of 20.1%.
However, the segment also recorded comparatively higher early-stage delinquencies, according to the report.
There has also been an increase in borrowers servicing multiple loans. The proportion of commercial vehicle borrowers with two or more active loans rose from 15.7% in June 2021 to 19.9% in June 2026.
Loan performance improves overall
Despite rapid growth in lending, later-stage delinquencies have improved across vehicle-finance categories, with auto loans recording the strongest asset quality among the segments covered in the report.
The data suggests that the expansion in vehicle credit has so far been accompanied by broadly stabilising repayment performance.
Vehicle loans spread deeper into smaller cities
The growth is also increasingly coming from outside India’s largest urban centres.
BT100 geographies accounted for 53% of two-wheeler loans and 45% of commercial vehicle loans, highlighting the growing reach of vehicle financing in smaller cities and towns.
Taken together, the data shows a vehicle-finance market that is not only getting bigger but also changing in composition — used-car financing is growing rapidly, loan sizes for cars are rising, and more first-time borrowers and customers outside major metros are entering the formal credit market.
