Financing for pre-owned vehicles grew at a faster clip than overall auto loans in India over the past five years (2021–2026), according to a recent report by credit information bureau CRIF High Mark. Financiers aggressively expanded their used-car portfolios despite navigating elevated credit stress and higher default rates compared to new vehicle financing.
Driven by shifting consumer preferences toward larger premium vehicles via the pre-owned route and deeper credit penetration into non-metro regions, the used-car loan portfolio reached ₹1.3 lakh crore by June 2026.
Key Portfolio Metrics (As of June 2026)
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Used Car Finance Portfolio: Scaled to ₹1.3 lakh crore, recording higher growth rates than overall auto loans over the 5-year tracking period.
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Overall Auto Loan Portfolio: Reached ₹9.9 lakh crore, anchored by new vehicle originations.
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Geographic Expansion: Growth was heavily supported by expanding credit access in BT100 geographies (beyond India’s top 100 urban centers).
Key Drivers Behind the Shift
1. “Trading Up” and Premiumization
First-time car buyers and aspirational middle-class households are increasingly opting for higher-segment pre-owned SUVs and sedans rather than entry-level new hatchbacks, enabling them to upgrade their vehicle tier at an accessible price point.
2. Lender Appetite and Risk Management
Despite used-car loans exhibiting higher early-stage delinquency compared to new auto loans (which enjoy the strongest asset quality in the wheels finance segment), lenders continued to fund the category due to higher risk-adjusted yields and improving late-stage recovery trends.
3. Bureau-Level Monitoring on Multi-Loan Borrowers
The report flagged an increasing incidence of borrowers holding multiple active vehicle loans across institutions. While asset quality across the broader wheels finance sector is stabilizing, credit bureaus are emphasizing tighter concentration checks to monitor overlapping exposures.
Vehicle Finance Segment Overview
| Segment | Portfolio Scale (June 2026) | Growth Trend (5-Yr) | Asset Quality Status |
| New Auto Loans | ₹9.9 Lakh Crore | Steady | Strongest asset quality across vehicle categories |
| Used Car Loans | ₹1.3 Lakh Crore | Outpaced overall auto loan growth | Higher stress/delinquency, but currently stabilizing |
| Commercial Vehicles | Expanding in BT100 markets | High volume growth | Moderately elevated early-stage delinquency |
