Chandigarh, Oct 13: India's personal mobility financing market is entering a new phase of growth, driven by expanding vehicle ownership aspirations, rising financing penetration and deeper credit access across emerging consumer segments, according to TransUnion CIBIL’s ‘Shifting Gears 2026 – Credit Drives Today’s Mobility’ report. The report studied personal vehicle financing between H1 2019 and H1 2026.
Passenger vehicle loans show a clear shift towards premiumization driven by preference for higher-value cars and rising costs. Two-wheeler loans, traditionally seen as consumers’ first credit product, have now graduated into a mainstream credit product.
Beyond First-Time Borrowing: The Changing Face of Two-Wheeler Lending
Two-wheeler loans have moved beyond their traditional role as an entry point into formal credit ecosystem. First-time borrowers accounted for 39% of two-wheeler loan originations in H1 2026, down 19 percentage points from 2019, with their share declining from the pre-pandemic period. However, 43% of borrowers had more than two years of credit history at the time of origination, up 16 percentage points from 2019. This changing mix shows a growing share of credit-experienced consumers participating in the two-wheeler loan market.
Two-wheeler credit has expanded alongside this shift in the borrower profile. Outstanding balances reached ₹1.76 lakh crore as of June 2026, 3.2 times the June 2019 level, while the active borrower base reached 3.3 crore from 1.7 crore in June 2019. Portfolio quality also improved over the period, with 90+ days past due balance-level delinquency declining to 1.4%, its lowest level since June 2019 observed at 2.7%.
Young and SuRu Borrowers Continue to Anchor Two-Wheeler Credit
Two-wheeler finance continues to support mobility across a broad section of India. In H1 2026, 64% of borrowers were from semi-urban and rural geographies (SuRu), and 43% were aged 30 years or younger. Their credit relationships are also becoming broader, with 32% of two-wheeler loan consumers holding consumption-led credit such as personal loans, consumer durable loans and credit cards in their wallets, this has increased by 10 percentage points compared to 22% in H1 2019.
Credit relationships often extend well beyond the initial vehicle purchase. Among consumers who originated a two-wheeler loan in H2 2022, 68% went on to originate another credit product within the next three years. This increased to 84% among first-time two-wheeler borrowers who already had at least two years of credit history. Their subsequent credit relationships can extend within 12 to 18 months into products ranging from personal loans and credit cards to auto and home loans.
Bhavesh Jain, MD & CEO, TransUnion CIBIL, said,
“Two-wheelers are closely linked with how young India studies, works and earns. For a student travelling to college, a young professional commuting to work, or someone earning through the gig economy or pursuing an entrepreneurial opportunity, personal mobility can open up a much wider set of possibilities. The borrower behind a two-wheeler loan is also changing. More consumers are coming in with an established credit history, and many continue to build wider credit relationships after the vehicle purchase. Two-wheeler finance is increasingly becoming part of a longer customer journey, with relevance extending well beyond the initial mobility need.”
Premiumisation is Reshaping Passenger Vehicle Financing
Passenger vehicle financing is increasingly reflecting a shift towards higher-value purchases. Preference for SUVs and feature-rich vehicles has contributed to higher vehicle prices and premiumization, making financing more central to car ownership. The average passenger vehicle loan amount reached ₹8.2 lakh in H1 2026, up 49% from H1 2019, while the average repayment tenure increased by five months to 62 months.
Chart 3: Premiumisation Drives Higher Loan Amounts and Longer Tenures
Non-banking financial companies continue to hold the largest share of passenger vehicle loans at 37%, ahead of private banks at 26%, with an increase in share of 4 percentage points from 2019 to 2026. The active passenger vehicle borrower base reached 2.5 crore as of June 2026, 1.7 times the June 2019 level. Portfolio quality improved over the same period, with 90+ days past due balance-level delinquency declining by 95 basis points to 0.5%.
Car Ownership Journeys are Becoming More Varied
Consumers are taking different routes into car ownership. Gen Z and younger Millennials1 are more visible among first-time car buyers and consumers moving from two-wheelers to cars, while core and older Millennials are increasingly represented among repeat buyers and consumers financing higher-value vehicles.
These shifts are also reaching wider markets. Rural originations among consumers moving from a two-wheeler to a car grew at a 15% CAGR since 2019, almost twice the 8% CAGR for overall auto-loan originations. Premiumization is extending beyond metros too, with 51% of borrowers taking another higher-value car (HVC)2 loan in H1 2026 going to consumers in semi-urban and rural geographies, up six percentage points since 2019.
Mr. Jain added,
“Car ownership is increasingly being shaped by a combination of aspiration and affordability. Consumers are choosing higher-value and feature-rich vehicles, while larger loan amounts and longer tenures are helping make these purchases more manageable. Premiumization is also extending beyond the larger cities, reflecting how ownership aspirations are changing across India. A first-time car buyer, someone moving up from a two-wheeler, a repeat buyer and a customer upgrading to a higher-value vehicle can have very different credit histories and financial profiles. Credit information can bring greater clarity to these journeys and support more informed and responsible financing decisions.”
India’s mobility credit market is becoming more mature, with two-wheeler borrowers building broader credit relationships and passenger vehicle buyers moving towards higher-value ownership. The growth of younger borrowers, deeper geographies and more varied ownership journeys is widening the market and increasing the role of formal credit in enabling mobility across India.
