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Multiple vehicle loans, bigger tickets raise risk

By Sohail Khan 25 August 2026, 12:40 am

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Business News›Industry›Banking/Finance›Banking›Rising multiple vehicle loans, bigger ticket sizes raise risk for lenders

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Rising multiple vehicle loans, bigger ticket sizes raise risk for lenders

Synopsis

Vehicle buyers are increasingly taking multiple loans, while the average amount borrowed is also rising, raising potential credit risks for lenders. The trend is most visible in commercial vehicle finance, where borrowers with two or more loans rose to 19.9% in June from 15.7% a year earlier.

The interiors of Maruti Suzuki’s e Vitara SUV car inside a showroom in Ahmedabad — More vehicle buyers are taking multiple loans, while the average amount borrowed per customer is also rising, potentially increasing credit risks for lenders.

Kolkata: More vehicle buyers are taking multiple loans, while the average amount borrowed per customer is also rising, potentially increasing credit risks for lenders.

The rise in concentration risk is most pronounced in commercial vehicle finance, which has grown at a 20% compound annual rate to ₹7.4 lakh crore as of June end, data from Crif High Mark showed.

The share of commercial vehicle loan borrowers altogether having two or more loans rose to 19.9% from 15.7% a year earlier. Meanwhile, the average vehicle loan exposure per borrower for buying passenger taxis to heavy trucks increased to ₹7.8 lakh from ₹6.4 lakh.

ET Bureau

"Exposure to multiple loans calls for intense monitoring by the lenders at the micro level as there can be spillover effects in case of defaults," Bank of Baroda chief economist Madan Sabnavis said.

ALSO READ | Commercial vehicle loans post 20.1% five-year CAGR as used cars and auto premiumisation drive lending

"As they are small operators, care needs to be taken when disbursing loans which includes going through the credit history of the borrower as well as monitoring the same," he said.

Nearly half of the vehicle finance borrowers hold credit exposures of ₹60 lakh or more, reflecting strong and established credit relationships driven by high-ticket loans such as housing finance alongside vehicle finance. They also have unsecured loans, the Crif report showed.

The commercial vehicle loan segment carries the highest early bucket stress, according to the credit information company. "Within the borrower base, a growing micro segment of multi-loan borrowers is emerging, underscoring the need for deeper bureau checks to assess concentration risks," it noted in a report.

Auto loans, used to buy personal cars, saw the share of borrowers with two or more loan accounts rising to 6.8% at the end of the first quarter of FY27 from 5.6% seen a year back. Likewise, the ratio rose to 6.7% from 4.8% for used car loans and to 4.6% against 3.2% for two-wheeler loans.

The auto loan segment saw the sharpest rise in borrower level exposure with average loan rising to ₹5.9 lakh from ₹3.8 lakh as a reflection of rising premiumisation.

"This is an interesting trend as individuals are taking more leverage," Sabnavis said. "In fact, overall leverage including vehicle, home, personal, credit card, etc has been going up, which is a pointer to consumerism."

The share of vehicle finance to the overall retail credit pie remains the same at 11.4% over a five-year horizon.

Auto loans accounted for the largest share within the wheel segment at ₹9.9 lakh crore at the end of June, growing 17.6% year-on-year, while two-wheeler loans remained the largest borrower segment, expanding to 36 million borrowers from about 23 million over 12 months, underscoring their role as the mainstay entry-level credit.

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