Lenders are loosening credit standards and growing auto loan volume at a pace not seen in years, even as the subprime cohort continues showing signs of deterioration.
For context: This calculated expansion built on solid fundamentals underneath the scary headlines. And for dealers, it means more opportunities to move inventory despite mounting affordability pressure on consumers.
By the numbers: Banks became the largest auto lender in 2025, holding nearly 28% of total financing and over 30% of all auto loans, according to Experian's annual review of the market. That marks the first time banks have overtaken captives in several years.
"Every bank I talk with is in a growth mode," Melinda Zabritski, head of automotive financial insights at Experian, told CDG News at the 2026 NADA Show. "They're buying a little deeper, they're buying a little older, they're moving into longer terms."
The reason: Captives lenders pulled back on their subvented rates as new car inventory normalized, which created openings for other providers. For example, auto focused finance companies grabbed over 21% of used loan volume and are picking up subprime growth.
And yet, subprime delinquencies are at, or exceeding (according to some indexes) recessions levels.
As Zabritski explained, most delinquencies occur within 18 to 20 months of origination.
And the most troubled 2022 vintage (loans made during the height of inflated values and rate uncertainty) have mostly cycled through that window.
Outside those specific loans, performance looks solid.
"No one is surprised by the levels of delinquency we have right now," Zabritski said. "Whereas 2009, it just kind of came out of the blue. People weren't planning for it. We're planning for it now."
Why it matters: When the average new vehicle payment sits at $750 a month and $531 for used, many would-be car buyers are priced out, especially as housing costs, insurance, and everyday expenses rise. So, lenders are stretching loan lengths to bring monthly payments down to levels consumers can actually handle.
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But between the lines: Subprime buyers are about to get an unexpected unlock in the used EV market.
Off-lease volume sits at a trough in 2026 (around 2.5 million units) but will jump to 3 million in 2027.
EVs will represent roughly 20% of that volume by the second half of 2027, with nearly 800,000 EV units returning to market in 2028, Zabritski said.
As those vehicles hit the used market, they'll open access to late-model inventory for more financially-strapped buyers.
Bottom line: Lenders have capital and they're itching to deploy it. The push to grow portfolios is less about risk-taking and more about reclaiming lost ground after several cautious years. For dealers, that spells a friendlier financing environment, more approvals, and renewed competition among banks, captives, and independents to buy deeper.
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