Two-Wheeler Loans: India’s Biggest Yet Riskiest Credit Entry Point

Data from CRIF High Mark, the credit bureau's latest report, shows the number of active two-wheeler borrowers grew from 2.3 crore to 3.6 crore over five years. That surge pushed total outstanding loans to Rs 1.9 lakh crore in June 2026. Non-Banking Financial Companies (NBFCs) dominate the segment, holding 70.6 percent of all originations.

Anish Kila, Director at Perfect Group of Companies, underscored the sheer size of the market during an auto lending panel in Mumbai on 19th August. "Two-wheeler loan penetration in India is approaching 13 percent, making our market the second largest in the world," Kila said.

While only 4.6 percent of borrowers hold multiple vehicle loans, individual debt levels are rising. The average loan balance per borrower climbed from Rs 30,000 to Rs 50,000. Premium and electric models priced above Rs 1 lakh now make up 43 percent of all new loan values.

Two-Wheeler Borrowers Carry the Highest Unsecured Debt Risk

Two-wheeler borrowers also hold 17.4 percent of their total debt in personal unsecured loans, the highest proportion of any vehicle class. Financial stress in this group can easily spill over into defaults. Dr. Kalyan Kumar Hatti, Chairman of the International Federation of Electric Vehicle Association,  pointed out that steady cash flow is vital for these borrowers, noting that access to capital determines whether small borrowers stay solvent or fail.

Used Two-Wheeler Financing Seen as Next Growth Driver

Kila added that sustaining market growth will require building reliable financing options for used two-wheelers. "Two-wheelers are the fastest-selling category in the second-hand market. If we want faster growth, we must build clear valuation and lending systems for pre-owned sales," Kila said.