India's vehicle finance market grew 17.1% year-on-year in the first quarter of FY27, according to a CRIF High Mark report titled Wheels and Ambition. The report indicates growth in used-car loans, commercial vehicle financing, and wider credit penetration in smaller towns and cities.

Used-car loans recorded a compound annual growth rate (CAGR) of 26.2% between June 2021 and June 2026, making it the fastest-growing segment. The number of borrowers in this segment increased 2.4 times during that period. Approximately 75% of used-car loans originated in Q1 FY27 were provided to new-to-product borrowers.

Segment trends and loan sizes

Two-wheeler loans continue to act as an entry point into formal credit, with the borrower base increasing from 2.3 crore in June 2021 to 3.6 crore in June 2026. About 80% of these borrowers were new-to-product.

The auto-loan market is also seeing larger loan sizes. The average ticket size of new auto loans reached ₹8.6 lakh in Q1 FY27, while the average exposure per borrower saw a five-year CAGR of 9.2%. The share of loans exceeding ₹15 lakh rose to 29.8% in Q1 FY27, up from 27.6% in Q1 FY25.

Commercial vehicle finance recorded a five-year CAGR of 20.1%, though the segment experienced higher early-stage delinquencies. The proportion of commercial vehicle borrowers with two or more active loans rose from 15.7% in June 2021 to 19.9% in June 2026.

Geographic expansion and asset quality

Vehicle financing is spreading beyond major metros. BT100 geographies accounted for 53% of two-wheeler loans and 45% of commercial vehicle loans.

Despite rapid lending growth, later-stage delinquencies have improved across vehicle-finance categories. Auto loans recorded the strongest asset quality among the segments covered in the report.