For the first time since 2019, two-wheeler financiers are reducing lending due to a rise in loan defaults. This decision is mainly being taken by non-banking financial companies (NBFCs) and the financing divisions of two-wheeler manufacturers. These companies are making borrowing stricter by lowering the loan-to-value (LTV) ratio and shortening the loan repayment period, according to industry officials.
The move comes as nearly 75% of two-wheelers in India are purchased through loans. By tightening credit policies, financiers hope to reduce risks and control rising defaults. However, this decision is likely to add further pressure on the two-wheeler industry, which is already struggling with slowing sales.
With fewer loan options and stricter terms, potential buyers may find it harder to afford two-wheelers, which could impact overall demand in the market. Industry experts are closely watching the situation, as it may have long-term effects on both vehicle sales and the financial sector.
