India’s NBFC Vehicle Loan AUM Expected to Hit ₹11 Lakh Crore by FY27

December 10, 2025

The assets under management (AUM) of vehicle loans provided by India’s non-banking financial companies (NBFCs) are projected to reach ₹11 lakh crore by FY27, signaling robust growth in the sector. According to industry reports, this represents a 16–17% annual growth rate, driven by steady demand for both new and used vehicles. The growth reflects the rising penetration of NBFCs in the vehicle-finance segment and their expanding reach into tier-2 and tier-3 cities.

Vehicle loan AUM of India’s NBFCs to reach Rs 11 lakh crore by FY27: Report
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Used Vehicles to Lead Growth

Among the various sub-segments, used-vehicle financing is expected to outpace new-vehicle loans in terms of growth. The trend is fueled by rising ownership costs for new vehicles, increasing formalization of used-vehicle loans, and NBFCs’ ability to reach a broader borrower base. As affordability pressures rise, many consumers are opting for used vehicles, creating significant opportunities for NBFCs.

Broader NBFC Sector Trends

Vehicle finance, together with home loans, forms a major portion of NBFCs’ total AUM. Industry analysis indicates that these segments, which constitute around 44% of overall NBFC AUM, are expected to drive combined growth of 18–19% over FY26 and FY27. Overall, NBFC AUM is projected to cross ₹50 lakh crore by March 2027, highlighting the growing importance of vehicle loans in the non-banking financial ecosystem.

Opportunities and Challenges

The expansion of vehicle loans presents NBFCs with significant opportunities, including access to a wider customer base, particularly price-sensitive borrowers, and potential scale benefits. However, the sector also faces challenges. Growth in new-vehicle loans may remain subdued due to weak consumer demand and vehicle sales. Additionally, used-vehicle financing, while expanding, carries risks related to asset quality, regulatory changes, and broader economic conditions.