Commercial vehicle loans lead India's auto lending boom with 20.1% CAGR
India's vehicle lending market is expanding rapidly, led by commercial vehicles and used cars, with rising ticket sizes and broader credit access.
India's vehicle financing landscape is undergoing a significant transformation, with commercial vehicle loans emerging as the primary growth engine. Between June 2021 and June 2026, this segment recorded a compound annual growth rate (CAGR) of 20.1 per cent, according to a new analysis of lending trends.
The used-car loan category has proven to be the most dynamic, expanding at a 26.2 per cent CAGR over the same period. The number of borrowers in this segment grew 2.4 times, signalling a shift toward formal credit channels for pre-owned vehicles. This category is now transitioning into a mainstream credit product, with new-to-product borrowers accounting for 75 per cent of all used-car loan originations in the first quarter of FY27.
Two-wheeler financing continues to serve as the entry point for many first-time borrowers. The active borrower base in this segment rose from approximately 2.3 crore in June 2021 to 3.6 crore by June 2026. Notably, 80 per cent of these borrowers are new to credit products altogether, underscoring the segment's role in financial inclusion.
The broader auto financing market is also witnessing a shift toward higher-value loans. Average exposure per borrower grew at a 9.2 per cent CAGR, and the share of auto loans exceeding Rs 15 lakh increased from 27.6 per cent in Q1 FY25 to 29.8 per cent in Q1 FY27. Overall vehicle loan originations rose 17.1 per cent year-on-year in Q1 FY27, with the average auto-loan ticket size reaching Rs 8.6 lakh.
Asset quality trends are mixed across segments. Auto loans maintain the lowest risk profile, while commercial vehicle loans show comparatively higher early-stage delinquency. Later-stage delinquency indicators have improved across most categories.
The report also highlights a growing trend of multi-loan borrowers, particularly in the commercial vehicle segment, where the share of borrowers with two or more active loans rose from 15.7 per cent in June 2021 to 19.9 per cent in June 2026. This deepening of lender relationships points to the need for tighter concentration checks at the bureau level as the market matures.