Affordability continues to pressure the auto retail market, with consumers gravitating toward used vehicles, longer loan terms, and broader financing options, according to Experian.
The details: The shift, highlighted in Experian’s State of the Automotive Finance Market: Q1 2026, underscores the impact higher new-vehicle costs are having across the credit spectrum.
Average new loan amounts approached $44,000, with average monthly payments reaching $770 for new vehicles and $531 for used vehicles.
Nearly 19% of all loan payments and more than 16% of new-vehicle payments are now $1,000 or higher.
Longer-term financing continues to grow, with nearly one-third of all loans extending beyond 72 months.
Between the lines: Credit availability broadened in Q1 as financing activity expanded beyond top-tier borrowers, while lender competition, leasing activity, and refinancing patterns continued shifting year over year.
By the numbers…
Super prime share declined from 35.19% to 33.92% year over year, while prime share fell from 37.23% to 36.20%.
Near prime increased from 14.66% to 15.20%, with subprime rising from 11.59% to 12.70% and deep subprime climbing from 1.33% to 1.61%.
Bank market share increased from 26.25% to 28.42% vs last year, while finance company share rose from 14.48% to 15.24%, and captive lender share fell from 29.16% to 26.83%.
New lease penetration dropped from 25.78% in Q1 2025 to 24.10% in Q1 2026, while used lease penetration slipped from 0.30% to 0.26%.
Quarterly refinance volume climbed from 66,000 in Q1 2024 to 111,000 in Q1 2026, with total refinancing amounts increasing from $1.98 billion to $3.48 billion over the same period.
What they’re saying: “While there isn’t one singular data point that captures the current state of the market, the biggest takeaway is that the industry is doing well, and in some instances, growing. Yes, we’re seeing moderate increases in 30- and 60-day delinquencies, as well as increases in loan amounts and monthly payments, but the growth rate of delinquencies has slowed, and shoppers are still heading to the dealership,” Melinda Zabritski, head of Automotive Financial Insights at Experian, told CDG News, via email.
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Why it matters: As buyers stretch loan terms, seek lower monthly payments, and increasingly gravitate toward used vehicles, dealers may need to focus more on flexible financing, payment-driven selling, and affordable inventory strategies.
Zooming in: Vehicle mix continued shifting toward utility segments, with trucks and vans gaining share compared with last year, alongside gas and hybrid vehicles as EV demand softened.
Truck share of new financing increased from 16.77% in Q1 2025 to 17.89% in Q1 2026, while van share rose from 2.01% to 2.14%.
Car share declined from 17.49% to 16.41%, while CUV/SUV share remained relatively stable, slipping slightly from 63.74% to 63.56%.
Gas-electric hybrid share increased from 12.08% to 14.90%, while ICE vehicle share rose from 72.65% to 76.24%.
EV share declined from 10.93% to 6.23%, while plug-in hybrid share fell from 2.35% to 0.96%.
Bottom line: “While longer-term loans may have an impact on trading cycles and keep consumers in vehicles longer, some of the growth in refinancing activity could help improve consumers’ equity positions more quickly,” said Zabritski. “The key dynamic to watch is affordability management, not longer loan terms in isolation. If longer loan terms enable borrowers to stay on top of their loan payments, it helps better position the industry in the long run.”
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