TransUnion's latest Consumer Credit Forecast projects auto loan delinquencies will reach 1.51% (60+ days past due) by year-end, and level out at 1.54% by the end of 2026.
Why it matters: This marks the fifth straight year of auto loan delinquency growth, but each year's uptick has been progressively smaller, discouraging lenders from dramatically tightening or pulling back from riskier borrowers.
The catch: These conditions keep inventory and sales moving, but consumers are managing elevated payments by refinancing into longer terms.
According to Experian's latest State of the Automotive Finance Market Report (Q3), refinance volume hit 121,000 transactions totaling $3.8 billion during the quarter.
Borrowers are securing average rate reductions of 2.08% on average (or saving $77 per month).
And credit unions dominate refinancing with 65% market share, offering the steepest rate cuts.
After refinancing, effective loan terms now average 90.57, or 7.5 years.
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Between the lines: A 90-month effective term means that many drivers are holding vehicles far longer than the traditional 5-6 year ownership cycle, and more borrowers are underwater when they finally do return to the market.
This surge is keeping customers out of showrooms longer, which pressures new vehicle sales velocity and used car inventory sourcing.
The bottom line: Lenders are keeping the credit game alive by stretching payments instead of shutting borrowers out, and dealers will likely indirectly pay for it over time.
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