Subprime Auto Loans Hit Five-Year High as Borrowers Stretch Terms
Event summary
- Subprime borrowers accounted for 15.31% of total vehicle financing in Q4 2025, up from 14.54% a year earlier.
- Average new-vehicle loan amounts rose $1,882 YoY to $43,582, with monthly payments increasing $21 to $767.
- Longer loan terms (73–84 months) reached nearly 30% for new vehicles, up from 26.03% in Q4 2024.
- Thirty-day delinquencies increased to 2.54% from 2.45% YoY.
The big picture
Experian’s data reveals a strategic pivot toward subprime borrowers as affordability pressures persist. The shift mirrors broader trends of stretched loan terms and higher delinquencies, signaling potential systemic risks if economic conditions deteriorate. With banks leading market share at 29.29%, lenders’ ability to balance growth with risk management will be critical.
What we're watching
- Credit Risk
- How rising subprime penetration will affect default rates amid higher loan amounts.
- Lender Strategy
- Whether banks and captives can sustain profitability as longer terms dilute interest income.
- Regulatory Scrutiny
- The pace at which policymakers may intervene in subprime lending practices.
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