Used Cars, Commercial Vehicles Fuel 17.1% Growth in India’s Vehicle Finance Market: CRIF High Mark

India’s vehicle financing market continued to expand in the first quarter of FY27, with commercial vehicles and used cars emerging as some of the strongest growth drivers. According to the latest research from CRIF High Mark, vehicle-finance originations increased 17.1% year-on-year in Q1 FY27, supported by growth in both financing volumes and average loan values.

The report, titled Wheels and Ambition: A Research Report on India’s Vehicle Finance Landscape, analyses financing trends across passenger vehicles, two-wheelers, commercial vehicles and used cars, while also examining borrower behaviour and portfolio risk.

Used-Car and Commercial Vehicle Financing Gains Momentum

Commercial vehicle financing recorded a 20.1% five-year CAGR between June 2021 and June 2026. Used-car financing performed even better, registering a 26.2% CAGR during the same period.

The used-car segment also witnessed a significant expansion in its borrower base, which increased by 2.4 times over the five-year period. This indicates that financing for pre-owned vehicles is becoming increasingly organised and accessible to a wider group of customers.

Key Vehicle Finance Growth Figures

Two-Wheeler Finance Continues to Expand

Two-wheelers remain the largest borrower segment within vehicle finance. The number of two-wheeler borrowers increased from around 2.3 crore in June 2021 to 3.6 crore in June 2026.

The segment is also attracting a substantial number of first-time borrowers. Around 80% of two-wheeler financing borrowers were classified as new-to-product customers, highlighting continued expansion of formal credit access.

Higher-Value Cars Drive Auto Loan Growth

Passenger vehicle financing is showing signs of a shift towards higher-value vehicles. The average exposure per auto-loan borrower increased at a 9.2% CAGR between June 2021 and June 2026.

The proportion of auto loans exceeding ₹15 lakh also increased, rising from 27.6% in Q1 FY25 to 29.8% in Q1 FY27.

The average auto-loan ticket size reached ₹8.6 lakh in Q1 FY27, suggesting stronger financing activity in higher-value vehicle purchases.
Vehicle Finance Risk Environment Shows Signs of Improvement

Alongside the growth in originations, the overall asset-quality environment is showing signs of stabilisation.

CRIF High Mark reported improvement in later-stage delinquency across vehicle-finance categories. Passenger vehicle loans recorded the strongest asset-quality performance, while commercial vehicle financing continued to experience relatively higher early-stage delinquency.

At the same time, multiple-loan ownership is increasing in some segments. Among commercial vehicle borrowers, the proportion of customers with two or more active loans increased from 15.7% in June 2021 to 19.9% in June 2026.

Financing Expands Beyond Major Urban Markets

Vehicle financing is also spreading beyond India's largest urban centres. Growing penetration in BT100 locations indicates that financing demand is expanding into smaller cities and emerging markets.

Two-wheeler financing recorded a 53% BT100 share, while commercial vehicle financing registered a 45% share.

Commercial Vehicles and Used Cars Become Key Growth Areas

The latest trends indicate that India's vehicle-finance market is becoming more diversified. While two-wheelers continue to provide a large borrower base, used cars and commercial vehicles are delivering strong growth rates, while passenger vehicle financing is moving towards higher-ticket transactions.

The expansion of financing into smaller cities, increasing participation from new-to-product borrowers and improving later-stage asset quality point towards a market that is becoming broader and more segmented.

For the commercial vehicle industry, the strong growth in financing is particularly significant, as easier access to credit can support fleet expansion and vehicle replacement among small transport operators and businesses.

Overall, the data suggests that India's vehicle-finance industry is moving beyond a simple volume-driven model, with commercial vehicles, used cars, premium passenger vehicles and two-wheelers each contributing to growth in different ways.