Summary of this article
Vehicle finance portfolio grew 20.1 per cent over five years.
Used-car loans recorded the fastest growth at 26.2 per cent.
Commercial vehicle borrowers showed the highest early-stage delinquency.
India’s vehicle finance market has grown rapidly over the past five years, with borrowers taking high-ticket loans, and newer segments gaining a bigger role. Growth has also varied across vehicle categories, with used cars recording the fastest expansion.
According to a report by CRIF High Mark, titled Wheels & Ambition: A Research Report on India’s Vehicle Finance Landscape, the vehicle finance portfolio grew at a compounded annualised growth rate (CAGR) of 20.10 per cent between June 2021 and June 2026. Vehicle finance accounted for 11.40 per cent of the overall retail credit portfolio in June 2026, the same share as in June 2021.
Originations across vehicle finance rose 17.10 per cent year-on-year (y-o-y) in the first quarter of FY27, helped by higher loan sizes and growth in lending volumes. The mix has also shifted. The share of auto loans in retail credit fell to 5.50 per cent from 5.90 per cent, while commercial vehicle, two-wheeler and used car loans gained share.
Premium Models Gain Share
Auto loans grew at 17.60 per cent CAGR, with the average ticket size reaching Rs 8.60 lakh in Q1 FY27. Loans above Rs 15 lakh made up 29.80 per cent of originations, up from 27.60 per cent in Q1 FY25.
Two-wheeler loans grew at 19.70 per cent CAGR, with the borrower base rising from 23 million to 36 million. About 80 per cent of borrowers were new-to-product customers. Loans above Rs 1 lakh accounted for 43 per cent of originations in Q1 FY27, compared to 38 per cent in Q1 FY25.
Used Cars Lead Growth
Used car loans recorded the fastest growth, with a 26.20 per cent CAGR over five years. The borrower base grew 2.40 times during this period, while 75 per cent of new originations came from new-to-product borrowers.
Commercial vehicle loans grew at 20.10 per cent CAGR. Lending for loans between Rs 5 lakh and Rs 10 lakh rose to 30.50 per cent of originations in Q1 FY27 from 22.40 per cent in Q1 FY25. However, this segment has shown the highest early-stage delinquency, with portfolio-at-risk (PAR) 31-90 at 4.10 per cent in June 2026.
The report also highlighted an increase in borrowers having multiple commercial vehicle loans. The portion of borrowers who had two or more active loans rose from 15.70 per cent in June 2021 to 19.90 per cent in June 2026.
Younger Borrowers Face Higher Delinquency
The report further said that borrowers aged 31-40 and 41-50 were stronger segments for auto loans. Borrowers aged 30 or below had a PAR 91-180 delinquency rate of 1 per cent in June 2026, compared to 0.60 per cent or lower among older age groups.
The report also flagged higher ticket sizes, multiple loans and rising debt per borrower as areas requiring closer checks by lenders.
