From SUVs to 62-month EMIs: How India's car-buying habits are changing

A car purchase often begins with a wish list. More space for the family, a higher driving position, better features or perhaps an upgrade from a hatchback to an SUV. But as buyers set their sights on more expensive cars, another question becomes just as important: how much will the monthly EMI cost?For many Indian households, buying a car is increasingly about balancing aspiration with affordability. Bigger loans and longer repayment periods are helping buyers spread the cost of their purchases. And this shift is no longer confined to metropolitan cities. Consumers in semi-urban and rural India are also moving towards higher-value cars, while two-wheeler loans are evolving beyond their traditional role as a first step into formal credit.According to TransUnion CIBIL’s Shifting Gears 2026: Credit Drives Today’s Mobility report, which analyses vehicle financing trends between the first half of 2019 and the first half of 2026, changing consumer aspirations are reshaping how Indians buy and finance their vehicles.BIGGER CARS, BIGGER LOANSThe average passenger vehicle loan amount rose 49% between the first half of 2019 and the first half of 2026 to Rs 8.2 lakh. Over the same period, the average repayment tenure increased by five months to 62 months, or just over five years, according to the report. The growing preference for SUVs and feature-rich vehicles has contributed to higher vehicle prices, making loans an increasingly important part of the car-buying decision.The report's data on loan amounts and repayment tenures highlights this shift: consumers are borrowing more to finance their cars and taking longer to repay those loans. A longer tenure can make monthly EMIs more manageable, but it can also increase the total interest paid over the loan period, depending on the interest rate and loan terms. For buyers, therefore, the decision is no longer just about whether they can afford a car's price. It is also about how comfortably they can accommodate the EMI in their monthly budget.THE PREMIUM CAR STORY IS MOVING BEYOND METROSThe appetite for higher-value cars is also spreading beyond India's largest cities.According to the report, 51% of borrowers taking loans for another higher-value car in the first half of 2026 were from semi-urban and rural areas. Their share increased by six percentage points from 2019.The transition from two-wheelers to cars is gaining ground in these markets, too. Rural originations among consumers moving from a two-wheeler to a car grew at a compound annual growth rate of 15% since 2019, nearly twice the 8% growth in overall auto-loan originations.These findings suggest that car ownership aspirations are expanding across a wider range of locations. For some consumers, a car may represent the next step after years of using a two-wheeler. For others, it may be an upgrade to a more spacious or feature-rich vehicle as family needs and preferences change.Age is also shaping these ownership journeys. The report found that Gen Z and younger Millennials were more visible among first-time car buyers and consumers moving from two-wheelers to cars. Core and older Millennials, meanwhile, featured more prominently among repeat buyers and those financing higher-value vehicles.India's car market is thus catering to different stages of ownership, from the first purchase to the next upgrade.TWO-WHEELER LOANS ARE NO LONGER JUST A FIRST STEPWhile passenger vehicle buyers are borrowing more to move up the car ladder, the two-wheeler finance market is undergoing its own transformation.In the first half of 2026, first-time borrowers accounted for 39% of two-wheeler loan originations, down 19 percentage points from 2019. At the same time, the share of borrowers who had more than two years of credit history when taking a loan rose to 43%, from 27% in 2019.The report's first chart illustrates this changing borrower mix. Two-wheeler loans have traditionally served as an entry point into formal credit, but a growing proportion of borrowers now have an established credit history before taking one.The market has expanded significantly, too. Outstanding two-wheeler loan balances reached Rs 1.76 lakh crore in June 2026, 3.2 times the June 2019 level. The active borrower base grew from 1.7 crore to 3.3 crore over the same period.At the same time, the share of outstanding two-wheeler loan balances overdue by more than 90 days fell from 2.7% in June 2019 to 1.4% in June 2026.Together, these figures point to a market that is growing in size and increasingly includes borrowers with prior credit experience.FROM A BIKE LOAN TO A WIDER CREDIT JOURNEYA two-wheeler loan can also be the beginning of a longer relationship with formal credit.TransUnion CIBIL found that 68% of consumers who took a two-wheeler loan in the second half of 2022 went on to take another credit product within the following three years. The share rose to 84% among first-time two-wheeler borrowers who already had at least two years of credit history.The report's second chart highlights this progression from vehicle financing to other credit products, including personal loans, credit cards, auto loans and home loans.The findings suggest that a borrower's financial needs can evolve after the first vehicle purchase. As their circumstances change, they may seek credit for other consumption needs or larger financial commitments.The profile of two-wheeler borrowers reflects the market's reach. In the first half of 2026, 64% were from semi-urban and rural areas, while 43% were aged 30 or younger. The proportion of two-wheeler loan consumers holding consumption-led credit products, such as personal loans, consumer durable loans and credit cards, rose to 32% from 22% in the first half of 2019.For lenders, this creates an opportunity to build longer-term relationships with customers. For borrowers, it makes assessing repayment capacity especially important as multiple credit commitments accumulate.As Bhavesh Jain, managing director and chief executive officer of TransUnion CIBIL, said, two-wheelers are closely linked to how young Indians study, work and earn. He added that the borrowers behind these loans are changing, with more consumers bringing an established credit history and building wider credit relationships after their vehicle purchase.WHY NBFCS CONTINUE TO HOLD THE STEERING WHEELNon-banking financial companies (NBFCs) remain significant players in both segments of the vehicle-finance market. They accounted for 73% of two-wheeler loans and 37% of passenger vehicle loans.In passenger vehicle financing, NBFCs held a larger share than private banks, which accounted for 26%. NBFCs also increased their share of passenger vehicle loans by four percentage points between 2019 and 2026.The active passenger vehicle borrower base reached 2.5 crore in June 2026, 1.7 times its June 2019 level. Meanwhile, the share of outstanding passenger vehicle loan balances overdue by more than 90 days fell by 95 basis points to 0.5%.These figures underline the growing scale of vehicle financing and the role lenders play in funding different stages of vehicle ownership.In other words, India's vehicle-finance market is changing alongside consumer aspirations. Buyers are taking larger loans to finance higher-value cars, repayment periods are getting longer, and the premiumisation trend is reaching beyond major cities. Two-wheeler loans, meanwhile, are becoming part of a broader credit journey for many consumers.But a lower monthly EMI does not necessarily mean a cheaper car. Buyers need to consider the total interest payable over the loan period, alongside insurance, fuel, maintenance and other running costs.The challenge is to make room for aspiration without compromising financial flexibility. After all, a car may be upgraded in a few years, but the loan commitment can remain part of a household's budget for much longer.- Ends