Car Loans Up 49%: Is Your EMI Eating You Alive?

The average passenger vehicle loan in India has jumped to ₹8.2 lakh — nearly 49% more than 7 years ago. NBFCs fund most two-wheeler loans. If you're planning a vehicle loan, here's what this means for your EMI and credit score.

Here's what happened: The average passenger vehicle loan size in India has risen 49% over 7 years, reaching ₹8.2 lakh, reflecting higher car prices and shifting buyer preferences toward SUVs and premium models.. NBFCs account for 73% of two-wheeler loans and 37% of passenger vehicle loans, making them the dominant force in vehicle financing — often ahead of traditional banks.. Rising loan sizes mean larger EMI burdens for households, with longer repayment tenures becoming common as borrowers try to keep monthly outflows affordable..

What you should do: Check your CIBIL score before applying for a vehicle loan — a score above 750 can get you rates as low as 8.5–9%, potentially saving ₹50,000–₹75,000 on a ₹8.2 lakh loan.. Compare NBFC and bank loan offers side by side — NBFCs may approve faster but often charge 1–2% more in interest, which adds up to tens of thousands over the loan tenure.. Calculate total interest outgo (not just EMI) using a loan calculator — choose the shortest tenure your budget can handle to minimise the total cost of your vehicle loan..

Pro tip: A pre-approved vehicle loan offer from your salary account bank often carries a 0.25–0.5% lower rate — ask your bank before visiting the dealership's finance desk.