The pull-ahead for auto sales from the impact of tariffs and the elimination of the clean vehicle credit for EVs has led to a small decline in auto loan originations at the end of 2025 and leading into 2026.
What we know: New data from TransUnion’s Q1 2026 Credit Industry Insights Report shows auto loan originations dropped 0.92% in Q4 2025, with 6.2 million new accounts.
Originations are running 10% below Q4 2019 levels across all risk tiers. Super-prime originations fell 5.4% YOY, and prime-plus 2.9%.
Early indications are that the softer market has continued into 2026, as expected, according to Satyan Merchant, senior vice president, automotive and mortgage business leader at TransUnion.
“2026 has come out as kind of a moderate or a flat market. Partially because of that pull forward demand of auto vehicle sales in 2025 from tariffs and EVs,” Merchant told CDG in an interview. “I think we'll continue to see that in origination data in terms of what's going on with the consumer.”
Beyond that: Merchant also pointed out that higher interest rates and transaction prices are impacting the loan origination trends.
By the numbers, per the S&P Global Mobility/Auto Credit Insight data used for the TransUnion report:
The average financed amount for a new vehicle purchase was $45,028 in Q1.
On the other hand, the used-vehicle finance amount totaled $27,323.
With that, monthly payments for new vehicles averaged $786, and for used vehicles, $536.
“You’re starting to see more and more consumers, even in the super prime, struggle with the higher monthly payments,” Merchant said.
Digging deeper: Partial Q1 data shows an increase in the loan-to-value (LTV) ratio from 100% to 102% for new vehicles, compared to the start of 2025.
In the used market, there was a more noticeable jump, with the LTV’s reaching 128% from 110% before the pandemic. Merchant said the negative equity from purchases made during the high prices of 2022 and 2023 has contributed to the increase in LTVs.
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TransUnion’s report highlights that, over the past six years, the debt load for the most creditworthy borrowers has barely budged, while near-prime and subprime borrowers are carrying significantly more debt relative to their income
More specifically, the non-mortgage debt-to-income ratio for super prime lenders has changed by just 29 basis points over six years, whereas near-prime has increased by 176 basis points and subprime by 143 basis points.
Looking ahead: Merchant stated that the conflict in the Middle East and the increased gas prices may influence some purchasing decisions by consumers in the subprime tiers.
“Consumers who are more sensitive to their monthly expenses, like maintenance, insurance, gasoline, and fuel costs, are going to feel even more stretched,” Merchant said. “It may end up resulting in them holding off on trading in or buying a new vehicle, and trying to keep their older vehicle running…. And I think that may end up softening demand for originations as well.”
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