India’s vehicle financing patterns are changing, with average passenger vehicle loan amounts rising and two-wheeler borrowers increasingly entering the credit system with an established credit history, according to TransUnion CIBIL’s report, Shifting Gears 2026 – Credit Drives Today’s Mobility.
The report analysed personal vehicle financing between the first half (H1) of 2019 and first half of (H1) 2026. During this period, the average passenger vehicle loan amount rose 49% to ₹8.2 lakh, while the average loan tenure increased by five months to 62 months.
Non-banking financial companies (NBFCs) accounted for 73% of two-wheeler loans and 37% of passenger vehicle loans.
Two-wheeler borrowers have an established credit history
First-time borrowers accounted for 39% of two-wheeler loan originations in H1 2026, down 19 percentage points from 2019. Meanwhile, borrowers with more than two years of credit history accounted for 43% of originations, up from 27% in 2019.
Also read: Rural India fuels vehicle loan growth as credit quality improves: TransUnion CIBIL CEO
Outstanding two-wheeler loan balances reached ₹1.76 lakh crore in June 2026, 3.2 times the level in June 2019. The active borrower base nearly doubled from 1.7 crore to 3.3 crore over the same period.
Loan repayment performance also improved. The balance-level delinquency rate for loans overdue by more than 90 days fell to 1.4% in June 2026 from 2.7% in June 2019.
Borrowers from semi-urban and rural areas accounted for 64% of two-wheeler borrowers in H1 2026, while 43% were aged 30 or younger.
The share of two-wheeler loan consumers who also held consumption-related credit products, including personal loans, consumer durable loans and credit cards, rose to 32% in H1 2026 from 22% in H1 2019.
The report also tracked borrowers who took two-wheeler loans in the second half of 2022. Within three years, 68% had taken another credit product. The proportion rose to 84% among first-time two-wheeler borrowers who already had at least two years of credit history.
Subsequent borrowing included products such as personal loans, credit cards, auto loans and home loans.
Bhavesh Jain, MD and CEO, TransUnion CIBIL, said, “Two-wheelers are closely linked with how young India studies, works and earns. More consumers are coming in with an established credit history, and many continue to build wider credit relationships after the vehicle purchase. Two-wheeler finance is increasingly becoming part of a longer customer journey.”
Passenger vehicle financing: Larger loans and changing buyer profiles
The average passenger vehicle loan amount increased 49% to ₹8.2 lakh between H1 2019 and H1 2026. The report attributed the growing role of financing in car purchases partly to demand for SUVs and feature-rich vehicles, which has contributed to higher vehicle prices.
NBFCs accounted for 37% of passenger vehicle loans, followed by private banks at 26%. Private banks increased their share by four percentage points between 2019 and 2026.
The active passenger vehicle borrower base reached 2.5 crore in June 2026, 1.7 times the June 2019 level. The balance-level delinquency rate for loans overdue by more than 90 days declined by 95 basis points to 0.5% over the period.
The report also identified differences across age groups. Gen Z and younger Millennials featured more prominently among first-time car buyers and consumers moving from two-wheelers to cars. Core and older Millennials were more represented among repeat buyers and those financing higher-value vehicles.
Rural borrowers account for a growing share of car financing
The shift from two-wheelers to cars is also extending beyond urban markets. Loan originations among rural consumers moving from two-wheelers to cars grew at a compound annual growth rate (CAGR) of 15% from 2019, compared with 8% for overall auto-loan originations.
In H1 2026, semi-urban and rural borrowers accounted for 51% of borrowers taking another, higher-value car loan, up six percentage points from 2019.
Jain said, “Car ownership is increasingly being shaped by a combination of aspiration and affordability. Premiumisation is also extending beyond the larger cities. Credit information can bring greater clarity to these journeys and support more informed and responsible financing decisions.”
Also read: This overlooked auto stock has gone nowhere in 4 years. Why Amit Gupta likes it now