Used car loans outpace auto loans in last 5 years. What does it mean

Used car financing in India outpaced auto loans in the last five years, as a greater number of consumers preferred to fund theur purchased from formal financial bodies. This also indicates how the pre-owned car segment has grown in India over the last five years.

According to a report by Crif High Mark, used car financing witnessed growth at a CAGR of 26.2% to ₹1.3 lakh crore in June 2026, from around ₹40,000 crore in June 2021. In comparison to that, the auto loans grew at a CAGR of 17.6% over the same five years to ₹9.9 lakh crore in June 2026 from ₹4.4 lakh crore in June 2021. Interestingly, financiers have funded the used cars despite facing higher stress in the segment.

The report has pointed out that loans unpaid for between 31-90 days inched up to 3.1% in the used car portfolio as against just 2.1% in auto loans. Loans unpaid for between 91-180 days had used car loans performing better at 1%, but auto loans were even better at 0.6%, 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% versus 6.4% for the former, the report revealed. Overall, the asset quality in the 'wheels finance' segment, which also includes two-wheelers and commercial vehicle finance as well, is stabilising, as the report said.

According to the report, the commercial vehicle segment grew the second-fastest, at a CAGR of 20.1%, to ₹7.4 lakh crore over the last five years, up from ₹3 lakh crore.

Over the last five years, India’s used car market has grown significantly faster than the new car segment, shifting the ratio from fewer used cars sold than new ones to roughly 1.4 used cars sold for every new car. Annual used car volumes have climbed toward 60 lakh units, outstripping new passenger vehicle sales, which hover around 42 lakh to 45 lakh units.

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