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Car Loans Surge: Average Size Jumps 49% to ₹8.2 Lakh
13 Oct
Summary
- Average car loan size rose 49% to ₹8.2 lakh by H1 2026.
- Loan repayment tenures increased by five months to 62 months.
- Rural buyers financed 51% of higher-value car upgrades in H1 2026.
The average passenger-vehicle loan size in India experienced a significant 49% increase, reaching ₹8.2 lakh by the first half of 2026. This rise is attributed to consumers opting for more expensive vehicles, particularly SUVs, and an overall increase in vehicle prices. To accommodate these larger loan amounts, the average repayment tenure extended by five months to a total of 62 months.
This trend of higher-value vehicle financing is expanding beyond major cities. In the first half of 2026, 51% of consumers financing vehicle upgrades hailed from semi-urban and rural areas, a six-percentage-point increase since 2019. The financing for buyers transitioning from two-wheelers to cars in rural regions saw a robust 15% compound annual growth rate from 2019.
Delinquency rates on car loans showed improvement, with 90-179 days past due declining to 0.5%. Non-banking financial companies (NBFCs) also strengthened their position in vehicle financing, holding 37% of passenger-vehicle loans by June 2026, up four percentage points.
