MUMBAI: Consumer durable loans, such as buying a mobile phone on EMI, are helping lenders build credit histories for younger borrowers, contributing to a decline in two-wheeler loan delinquencies to a seven-year low of 1.4% in June 2026 from 2.7% in June 2019, according to TransUnion CIBIL.First-time borrowers accounted for 39% of two-wheeler loan originations in the first half of 2026, down 19 percentage points from pre-pandemic levels. Meanwhile, 43% of borrowers had more than two years of formal credit history, up from 27% in 2019. Another 18% had less than two years of credit history, indicating that more than 60% of borrowers had an established credit record, according to TU Cibil’s latest report, Shifting Gears 2026: Credit Drives Today’s Mobility.Consumption-led borrowing has contributed to this shift. Nearly a third of two-wheeler borrowers had consumption credit products in their credit histories in the first half of 2026, up from 22% in the corresponding period of 2019. Consumer durable loans featured in the histories of 18% of borrowers, gold loans in 16%, credit cards in 12% and agriculture-related credit products in 8%.Repayment records from small-ticket loans for smartphones, appliances and electronics allow lenders to assess borrowers before extending vehicle finance. The share of borrowers with above-prime CIBIL scores of 801 or higher rose to 16% in June 2026 from 9% in June 2019. The share of prime and above-prime originations increased by 17 percentage points.According to TransUnion CIBIL managing director and CEO Bhavesh Jain, the borrower profile is changing as more consumers enter vehicle finance with established credit histories and subsequently take on other credit products. “Two-wheeler finance is increasingly becoming part of a longer customer journey, with relevance extending well beyond the initial mobility need,” he said.Overall vehicle lending grew sharply between June 2019 and June 2026, while delinquencies fell. Two-wheeler loans outstanding rose 3.2 times to Rs 1.76 lakh crore and borrowers 1.9 times to 3.3 crore, while delinquencies fell 128 basis points to 1.4%. Passenger vehicle loans grew 2.6 times to Rs 11 lakh crore, with borrowers rising 1.7 times to 2.5 crore. Average sanctions rose 49% to Rs 8.2 lakh, while delinquencies fell 95 basis points to 0.5%. SUV demand and rising car prices extended average loan tenures by five months to 62 months.Semi-urban and rural markets accounted for 64% of two-wheeler originations and 61% of all vehicle originations in H1 2026, up from 56% in H1 2019. Rural car purchases by two-wheeler upgraders grew 15% annually, against 8% for overall auto loans; these markets accounted for 51% of higher-value car upgrades.NBFCs held 73% of outstanding two-wheeler loans, up 10 percentage points since 2019, against 23% for private banks and 4% for other lenders. They also led passenger vehicle finance with 37%, ahead of public sector banks at 30% and private banks at 26%. Used-car originations were 1.5 times pre-pandemic levels.Two-wheeler loans also opened the door to wider borrowing: 68% of H2 2022 borrowers took another credit product within three years, rising to 84% among those with at least two years of credit history. Within 12-18 months, 41% took consumer durable loans averaging Rs 23,000, 21% personal loans averaging Rs 2.47 lakh, 18% gold loans averaging Rs 1.40 lakh and 14% credit cards averaging Rs 84,000. Another 8% financed passenger vehicles with average sanctions of Rs 8.2 lakh, while 5% took home loans averaging Rs 23.7 lakh.
