Inside India's ₹20-Lakh-Crore Auto Loan Boom

India's vehicle loan book stood at ₹12.76 lakh crore across cars and two-wheelers in June 2026, according to TransUnion CIBIL's Shifting Gears 2026 report. CRIF High Mark's Wheels & Ambition report, which also covers commercial vehicles, puts the wider wheels finance portfolio at ₹20.5 lakh crore.

Both credit bureaus have tied this expansion to longer loan tenures, growing multi-product borrowing and reliance on non-banking financial company (NBFC) credit in smaller towns.

Moreover, CIBIL data shows delinquencies (balances 90 to 179 days past due) at a mere half a percent for passenger vehicle loans, which the bureau called an all-time low at the report's launch. At 1.4 percent for two-wheeler loans, the lowest since 2019. The two-wheeler rate matches the 1.3 percent average across overall retail credit, said Bhavesh Jain, MD and CEO of TransUnion CIBIL.

The depth of the industry’s lending portfolio relies on retail sales, which crossed 25 lakh units, making September the best on record for the month. The auto industry grew by 31.82 percent year-on-year for the same month, according to the Federation of Automobile Dealers Associations (FADA).

However, the association’s president, Sai Giridhar, called it the year's most base-distorted print, as buyers had deferred purchases in the week before GST 2.0 took effect on 22 September 2025. Growth over the first five months of FY27, before September, was about 17 percent, which he described as the truer underlying run-rate.

Credit accounts for much of this, with about six in 10 two-wheelers and nine in 10 new cars now financed, says Jain.

The 62-Month Stretch

The average sanction amount on passenger vehicle loans, new and used, has grown by nearly half since 2019 to ₹8.2 lakh, against cumulative inflation of about one-third, CIBIL says. Jain attributed the gap to higher vehicle prices and a shift in buyer mix from entry-level cars to entry-level SUVs.

Growth has since slowed, with CRIF putting the average new-car loan at ₹8.6 lakh in April to June 2026, up 1.2 percent year on year. FADA says further price increases are dealers' foremost risk for the coming quarter.

Average tenures have lengthened by five months since 2019 to just over five years, as buyers manage affordability through longer repayment, CIBIL's report says.

Used cars account for roughly a quarter of passenger vehicle originations and ₹2 lakh crore to ₹2.5 lakh crore of the ₹11 lakh crore passenger vehicle book, CIBIL says, though originations tapered after delinquencies rose in 2024. Jain said growth has lately been stronger in new cars. CRIF data shows used-car financing growing fastest of any vehicle credit segment, at a 26.2 percent compound annual rate over five years, with 75 percent of originations from borrowers new to used-car loans.

Repeat Borrowing, Limited Bureau Visibility

CIBIL data shows that of consumers who took a two-wheeler loan in the second half of 2022, more than two-thirds had taken another product by the second half of 2025. The next loan usually arrives within 12 to 18 months, and many borrowers take several.

Over two-fifths took a consumer durable loan averaging ₹23,000; 21 percent a personal loan above ₹50,000 averaging ₹2.47 lakh; 18 percent a gold loan and 14 percent a credit card.

CIBIL claims consumer durable and phone loans now bring in the bulk of new-to-credit borrowers, though four in 10 two-wheeler borrowers still arrive with no credit history, down from about 60 percent in 2019.

CIBIL's report presents the pattern as an opportunity, saying lenders that graduate high-potential borrowers will be best placed "to unlock higher lifetime value from two-wheeler borrowers". Asked whether debt levels among young borrowers are sustainable, Jain told Autocar Professional, "It is difficult to fully quantify because we don't have the income information to fully say whether people can pay the debt or not."

That rules out debt-to-income ratios. The bureau watches behavioural signals instead, such as how fast borrowers take loans and add unsecured credit, and says risk rises in segments that score poorly on them, across all age groups.

Two-wheeler borrowers carried unsecured loans (personal, consumer durable and credit card) equal to 15.1 percent of their retail portfolio in June 2026, the highest in vehicle finance, according to CRIF's report, though down from 17.4 percent in June 2024 as lenders de-risked.

NBFC Reliance in Smaller Towns

CIBIL data shows 64 percent of two-wheeler borrowers live in semi-urban and rural areas, and 61 percent of two-wheeler and passenger vehicle originations in the first half of 2026 came from those areas, up from 56 percent in 2019. Jain calls it a "Bharat story".

NBFCs hold nearly three-quarters of active two-wheeler loans, up from 63 percent in 2019, and 37 percent of passenger vehicle loans, up four percentage points. CIBIL says two-wheeler delinquency, down 128 basis points since June 2019, is being driven by NBFCs.

Asked why smaller-town borrowers rely on NBFCs, which have typically priced above banks, CIBIL argues that borrowers can choose any lender and that it is a question of access. CIBIL says NBFCs built dealer and direct selling agent networks and took on borrowers new to credit, and that their rates, once higher, have grown more competitive as delinquencies fell. This reliance on NBFCs could mean these borrowers pay more for credit, though neither report publishes interest rates, so the size of any gap cannot be measured.

Commercial Vehicle Delinquency and Dealer Inventory

CRIF's analysis of the ₹7.4 lakh crore commercial vehicle (CV) loan market puts portfolio at risk (PAR) for 31 to 90 days at 4.1 percent, the highest early-bucket delinquency in wheels finance, though down from 5.0 percent a year earlier. CV borrowers with two or more active loans have risen to 19.9 percent from 15.7 percent in June 2021, which CRIF says calls for tighter bureau-level concentration checks.

On showroom floors, FADA says passenger vehicle dealer inventory rose another five days in September to 43 to 45 days, more than double its 21-day benchmark, with 60 percent of dealers holding more stock ahead of the festive season.

EV and Segment Data Gaps

FADA data shows EVs at 11.58 percent of two-wheeler sales and 8.45 percent of passenger vehicle sales in September, with total EV retail at an all-time monthly high of about 3.34 lakh units, or roughly 13 percent of all vehicles. CIBIL receives no tagging that separates EV loans from other two-wheeler and auto loans, so it cannot track their performance. It says banks and NBFCs run dedicated EV programmes but was unsure whether lenders price them differently.

About 60 percent of two-wheeler loans go to borrowers aged 35 or younger, Jain said, but CIBIL cannot see how a vehicle is used and so cannot separate delivery riders from other borrowers. It says delinquency looks normal across the segments it can analyse. If gig incomes swing, however, localised defaults could emerge in loans that risk models treat as ordinary consumer debt.

Nonetheless, CIBIL says systemic risk is contained because borrowers have grown more credit-aware. About 35 percent of credit-active consumers now monitor their own scores, against about 1 percent in 2016, it says, and underwriting has improved with heavier use of bureau data.

It sees no incremental stress in the 30-plus and 60-plus days past due buckets, and delinquency on recent originations is still improving. Even so, it flags a pocket of highly leveraged borrowers, put at a minor fraction and spread across products and age groups, that CIBIL says warrants continued monitoring.