Indians are taking bigger car loans — and taking longer to repay them. TransUnion CIBIL’s “Shifting Gears 2026” report, released on 13 October 2026, says the average car loan has grown 49% in seven years, to ₹8.2 lakh, and the average tenure has reached 62 months. Is this a smart trend or a costly one? Let us see what the report says and what it means for your pocket.
What the CIBIL Report Found
- Average car loan: ₹8.2 lakh in the first half of 2026 — up 49% from the same period in 2019.
- Average tenure: 62 months — five months longer than before. That is more than 5 years of EMI for one car.
- First-time two-wheeler borrowers fell to 39% — fewer new riders are entering on two-wheeler loans.
- NBFCs hold the largest share of vehicle loans in India, ahead of banks.
Bigger loans are partly because cars cost more now. But the longer tenure is a choice — and it is the choice that quietly costs you money.
The Hidden Cost of a Longer Tenure
A longer tenure makes the monthly EMI look small. But you pay interest for more months. See this example for an ₹8.2 lakh car loan at 9.5% interest:
| Tenure | Monthly EMI (approx.) | Total interest paid |
|---|---|---|
| 3 years (36 months) | ₹26,300 | ₹1.26 lakh |
| 5 years (60 months) | ₹17,200 | ₹2.14 lakh |
| 7 years (84 months) | ₹13,500 | ₹3.13 lakh |
The 7-year loan’s EMI is about half of the 3-year loan — but you pay almost ₹1.9 lakh extra in interest. And by year 7, most cars have lost much of their value while you are still paying for them. Check your own numbers on our EMI calculator.
How to Choose the Right Car Loan Tenure
- Keep the tenure at 5 years or less if your income allows it. It is the sweet spot between EMI comfort and interest cost.
- Make a bigger down payment. Paying 20–30% upfront reduces both EMI and total interest.
- Keep total EMIs under 40% of your salary — including home loan, personal loan and card EMIs.
- Compare banks and NBFCs. NBFCs give most vehicle loans, but your own bank may offer a better rate if your CIBIL score is strong. See how to raise your CIBIL score before applying.
- Prepay when you get a bonus. Even one or two extra payments a year can cut a year off your loan.
Conclusion
The CIBIL report shows India is comfortable with bigger, longer car loans. Comfort is fine — as long as you see the full cost. A longer tenure lowers your EMI but can add lakhs in interest. Choose the shortest tenure you can comfortably pay, make a healthy down payment, and let the car be fully yours sooner.
Frequently Asked Questions
What is the average car loan amount in India in 2026?
According to TransUnion CIBIL’s Shifting Gears 2026 report, the average car loan in the first half of 2026 was ₹8.2 lakh — 49% higher than in 2019.
What is the maximum tenure for a car loan in India?
Most banks and NBFCs offer up to 7 years (84 months), and some offer up to 8 years. Longer tenure means lower EMI but much higher total interest.
Is a 7-year car loan a bad idea?
Not always, but it is costly. You may pay around ₹1.9 lakh extra interest versus a 3-year loan on ₹8.2 lakh, and the car’s value falls faster than your loan balance in the early years.
Who gives most car loans in India — banks or NBFCs?
NBFCs hold the largest share of vehicle loans in India, as per the CIBIL report. Still, compare both — your bank may beat the dealer’s NBFC offer if your credit score is good.
Sarthak Gupta writes about personal finance, loans and credit for Indian borrowers. His guides on Techy Loan explain CIBIL scores, RBI rules and loan apps in simple language so readers can borrow safely and confidently.
