North India has emerged as the leader in affordable auto loans during the last two quarters of FY24, with states like Punjab, Rajasthan, Jammu & Kashmir and Himachal, leading the charge, according to data from Capri Loans. Capri Loans is a leading car loan aggregator, which accounts for 5% for the passenger vehicle market in the country.
In the last quarter of FY24, the total number of auto loan applications processed by Capri Loans across the country stood at almost 58,000 with 75% of these applications being approved. Notably, there was a surge in applications for SUVs, while demand for hatchbacks also showed a steady increase. Banking partners evaluated applications basis credit score, income, and other eligibility criteria.
There was a strong appetite for vehicle ownership, particularly in the segment of loans under Rs.10,00,000. In FY24, of the total loan application over 57% applications were for a ticket size of under Rs.10,00,000.
| State | Q-o-Q growth in applications in Q4 FY23-24 (%) | % of applications < Rs. 10,00,000 |
| Punjab | 31.5 | 33 |
| Rajasthan | 22 | 19 |
| Jammu & Kashmir | 14 | 30 |
| Jharkhand | 12.5 | 13.3 |
| Bihar | 12.3 | 22 |
| Himachal Pradesh | 7.5 | 37.5 |
What’s Fuelling the Demand?
This surge in small auto loans underscores a broader shift in India’s financial landscape. As economic growth reaches beyond metropolitan areas, disposable incomes are rising in smaller towns and rural regions. According to McKinsey & Company, the number of households earning between 10-25 lakhs rupees annually is projected to increase from 80 million in 2018 to 140 million by 2025. This growing middle class, coupled with increasing digital connectivity, is driving financial inclusion, and enabling more people to access credit.
The expanding appetite for credit tells the story of a ‘New Bharat,’ where economic aspirations are no longer confined to urban centres. Financial institutions are stepping up, extending their reach into smaller communities and provide easier access to capital. This, in turn, is empowering individuals and small business owners alike to achieve their financial goals.
In the year ahead, the auto loan industry is expected to rise by 20% in terms of volumes and revenue, said Mr. Amit Sethia, Head – Business Alliances (Car Loans) at Capri Loans.
The surge in affordable auto loans is a promising indicator of the country’s economic health. As financial institutions continue to expand their presence in smaller towns, the impact of these loans will only grow, reinforcing their role as catalysts for economic progress in a rapidly transforming India.