TransUnion’s latest Credit Industry Insights Report shows auto loan originations (new loans booked for vehicle purchases) were up 5.9% year-over-year in Q1 2025, thanks to a surge that had plenty to do with tariffs pulling demand forward.
What they’re saying: “We definitely have some sort of tariff boost here of consumers going out and purchasing vehicles with the expectation that they could be more expensive tomorrow,” Chris Huszar, director of financial services consulting, explained during the webinar.
Add in bigger incentives on new cars, rising wages, and softer used-car values, and Q1 looked like one of the best affordability windows dealers have seen in years.
And yet: When you zoom out, originations are still down 5.5% compared to Q1 2019, meaning fewer people are taking out loans now than before the pandemic.
That’s where it gets tricky.
On paper, 2019 is a solid pre-pandemic baseline. However, dealers often (and for good reason) argue the comparison isn’t fair, because wages, credit access, and even vehicle mix look completely different now.
Point being: Lending growth looks decent vs last year, but compared to 2019, only super prime borrowers are originating more loans. Everyone else, from near-prime to subprime, is still below pre-pandemic volume.
Why this matters: Even if 2019 isn’t a perfect benchmark, it shows the market isn’t bouncing back evenly. And that loan growth is being carried almost entirely by the strongest-credit buyers, not a broad recovery across the board.
Huszar explained it this way: More consumers shifted up into prime and super prime during 2022, but many have since slipped back into lower tiers. Put simply, the pool of borrowers who qualify for the best rates is shrinking.
And that tilt toward stronger-credit buyers is also reshaping the loans themselves.
The average amount financed rose 2.5% on new vehicles and 2.8% on used, pushing monthly payments higher again after briefly leveling off in 2023–24.
Plus, while interest rates did ease slightly after Fed cuts in late 2024, that relief hasn’t reached most buyers.
Huszar noted that, since Q1, manufacturers have pulled back on 0% and 1.9% offers, which means the average APR is still climbing.
Auto delinquencies point the same way: The 60+ day delinquency rate inched up to 1.31% in Q2 2025, just five basis points higher than last year.
That’s nothing compared to the spikes dealers faced in 2022–23, but it still shows affordability gains aren’t sticking.
Used loans from 2022 remain the weakest performers, while newer books are holding steadier.
Big picture: Q1 originations got a temporary lift from tariffs and heavier incentives. But by Q2, the outlook was already shifting, with fewer qualified buyers in-market, rising monthly payments, incentives starting to fade, and delinquencies inching up.
In Huszar’s words: “Any progress towards affordability might be at risk, given what we've seen very, very early on in this tariff story.”
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