The average passenger vehicle loan has climbed to about INR 820,000 in seven years, driven by higher vehicle prices and buyers choosing better-equipped models, according to TransUnion CIBIL.
India’s passenger vehicle financing market has become markedly more expensive over the past seven years, with TransUnion CIBIL saying the average loan size has risen by about 49 per cent to roughly INR 820,000. The bureau links the increase to higher vehicle prices and a shift in buyer preferences towards better-equipped models, particularly entry-level sport utility vehicles, rather than inflation alone.
Speaking to Motoring Trends on the sidelines of the release of its Shifting Gears 2026 report, managing director Bhavesh Jain said “premiumisation” was now playing a clear role in the market. He said the underlying value of vehicles had climbed, base-model cars had become more expensive and consumers were increasingly moving away from the cheapest cars towards entry-level SUVs.
The change has been accompanied by a larger and deeper credit market. TransUnion CIBIL said the outstanding passenger vehicle loan book, including used-car finance, has expanded 2.6 times since June 2019 to about INR 1,110 billion. The average blended passenger vehicle loan ticket size now stands at roughly INR 820,000, almost half again as high as it was in June 2019.
The report also suggests that India’s vehicle lending market is being shaped by a broader shift in who is borrowing and how they enter formal credit. For two-wheelers, non-banking financial companies account for about 73 per cent of active loans, up from 63 per cent in June 2019, while the share of new-to-credit customers in two-wheeler originations has fallen to 39 per cent in the first half of 2026 from about 60 per cent in 2019. Jain said consumer durable loans, including phone financing, now provide the main entry point for many younger borrowers before they move on to vehicle credit.
Loan quality has improved even as the market has broadened. TransUnion CIBIL said two-wheeler loans overdue by more than 90 days made up 1.4 per cent of the portfolio, and the share of borrowers under 30 remained high at 43 per cent of originations. In the passenger vehicle segment, the bureau said 47 per cent of borrowers already held a consumer durable loan, personal loan or credit card when they took vehicle finance, while used-car loans accounted for 24 per cent of originations. The report also noted that lenders are seeing more overlap between two-wheeler and car borrowers, with some customers moving steadily up the credit ladder as they upgrade to higher-value vehicles.
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