India's vehicle finance market is shifting from a volume-driven business to a more segmented one, with used-car and commercial vehicle loans posting the strongest growth over the past five years, according to a new report from credit bureau CRIF High Mark.
The report, titled "Wheels and Ambition: A Research Report on India's Vehicle Finance Landscape," found that used-car loans grew at a 26.2% compound annual growth rate (CAGR) between June 2021 and June 2026 — the fastest pace among all vehicle-loan categories — while the borrower base for the segment expanded 2.4 times over the same period. Commercial vehicle loans grew at a 20.1% five-year CAGR, making it the second-fastest-growing category and what the report described as the market's clearest growth engine.
Two-wheeler financing remained the largest segment by borrower count, rising from roughly 2.3 crore borrowers in June 2021 to 3.6 crore in June 2026. The report noted that 80% of two-wheeler loan borrowers were new to credit products, underscoring the segment's role in bringing first-time borrowers into the formal financial system.
Premiumisation Trend Emerges in Auto Loans
Traditional auto loans showed signs of a "premium-led recovery," the report found. Average loan exposure per borrower in this segment grew at a 9.2% CAGR between June 2021 and June 2026, and the share of auto loans exceeding ₹15 lakh rose from 27.6% in the first quarter of FY25 to 29.8% in the first quarter of FY27 — indicating a shift toward higher-value vehicle purchases.
Overall vehicle-finance originations grew 17.1% year-on-year in the first quarter of FY27, driven by both larger loan sizes and continued growth in loan volumes across segments. The average auto-loan ticket size rose to ₹8.6 lakh, while 75% of used-car loan originations came from borrowers new to that product.
Asset Quality Stabilising, but Risk Pockets Remain
The report described the overall credit risk environment as stabilising, with later-stage delinquencies improving across vehicle-finance categories. Auto loans recorded the strongest asset quality of any segment, while commercial vehicle loans continued to show comparatively higher early-stage delinquency.
The report also flagged a rise in borrowers holding multiple active loans. In commercial vehicle lending specifically, the share of borrowers with two or more active loans climbed from 15.7% to 19.9% between June 2021 and June 2026. CRIF High Mark said the trend points to deepening relationships between borrowers and lenders but also signals a need for tighter bureau-level concentration checks to monitor borrower exposure across institutions.
Vehicle-finance originations are increasingly penetrating India's BT100 geographies — a classification covering markets beyond the country's largest urban centres. Two-wheeler loans drew 53% of originations from these areas, while commercial vehicle loans drew 45%, pointing to expanding credit access in smaller cities and towns.
CRIF High Mark is a credit information company licensed by the Reserve Bank of India under the Credit Information Companies (Regulation) Act, 2005. Established in 2011, the firm provides credit information and analytics to banks, non-banking financial companies, housing and microfinance institutions, insurers, and businesses, drawing on data contributed by more than 5,000 member institutions.