Used car loans grew faster than auto loans in last five years despite higher stress: Report

Mumbai, Used car financing grew faster than auto loans in the last five years, albeit on a lower base, as a greater number of Indians preferred to fund their purchases from formal financial bodies, a credit information company said on Wednesday.

The portfolio outstanding on used car finance grew at a compounded annual growth rate of 26.2 per cent to Rs 1.3 lakh crore in June 2026 from around Rs 40,000 crore in June 2021, the report by Crif High Mark said.

In comparison, the portfolio outstanding on auto loans grew at a rate of 17.6 per cent over the same five years to Rs 9.9 lakh crore in June 2026 from Rs 4.4 lakh crore in June 2021.


Interestingly, financiers have funded used cars despite facing higher stress in the segment, Crif said, pointing out that loans unpaid for between 31-90 days inched up to 3.1 per cent in the used car portfolio as against just 2.1 per cent in auto loans.

Loans unpaid for between 91-180 days had used car loans performing better at 1 per cent, but auto loans were even better at 0.6 per cent, the report said.

From a leverage perspective, both auto loans and used car loans have broadly the same number of borrowers having more than two loans, but the latter segment has a higher proportion of borrowers having unsecured consumption loans like personal loans, consumer durable loans and credit cards at 9.2 per cent versus 6.4 per cent for the former, it said.

Overall, the asset quality in the 'wheels finance' segment, which also includes two-wheelers and commercial vehicle finance as well, is stabilising, the report said.

The commercial vehicle segment grew the second-fastest, at a CAGR of 20.1 per cent, to Rs 7.4 lakh crore over the last five years, up from Rs 3 lakh crore.