An analysis from Experian’s automotive division underscores how subprime borrowers are carving out a bigger role in the vehicle financing landscape, even as affordability pressures persist across the industry. The company’s latest State of the Automotive Finance Market Report for the fourth quarter of 2025 shows that subprime consumers accounted for 15.31 percent of all vehicle loans, marking the highest fourth-quarter share since 2021 and a noticeable rise from 14.54 percent a year earlier.
According to insights from Experian, this shift highlights resilient demand for car purchases among credit-challenged buyers who continue to seek financing options despite broader economic adjustments.
Melinda Zabritski, Experian’s head of automotive financial insights, noted that the expansion in subprime activity demonstrates how both lenders and shoppers are adapting to changing conditions while keeping vehicle ownership accessible.
Breaking down the numbers further, subprime financing for new vehicles climbed to 6.61 percent in the quarter, up from 5.74 percent in late 2024, while the prime segment dipped slightly from 36.49 percent to 35.33 percent.
On the used-vehicle side, subprime’s portion edged higher to 22.47 percent from 22.11 percent, with prime borrowers declining from 36.75 percent to 35.88 percent.
Average loan sizes continued their upward trajectory.
For new cars, the typical amount financed reached $43,582, an increase of $1,882 year-over-year.
Monthly payments averaged $767, rising by $21, while interest rates held nearly steady at 6.37 percent compared with 6.34 percent previously.
Used vehicle loans averaged $27,528, up $872, with payments climbing to $537 from $528 and rates easing to 11.26 percent from 11.63 percent.
To help manage higher costs, borrowers and lenders increasingly turned to extended repayment schedules.
Nearly 30 percent of new-vehicle contracts now stretch 73 to 84 months, up from 26.03 percent, and loans exceeding 85 months grew to 2.22 percent from 1.84 percent.
A similar pattern emerged in used financing, where 73-to-84-month terms rose to 28.68 percent and ultra-long loans ticked up to 1.03 percent.
Zabritski emphasized that these adjustments reflect practical solutions to keep payments affordable.
“Consumers and lenders are finding ways, such as extending loan terms, to make the financing fall within a budget,” she said, adding that tracking these developments over the coming year will be essential.
Other highlights from the quarter include banks maintaining the largest market share at 29.29 percent, followed by captive finance companies at 27.55 percent and credit unions at 19.56 percent.
Delinquency rates saw modest increases, with 30-day delinquencies reaching 2.54 percent (up from 2.45 percent) and 60-day rates climbing to 1.00 percent from 0.94 percent.
Refinancing offered average monthly savings of $84, an improvement over the prior year’s $73.
New vehicle financing edged up to 42.20 percent of the market, while used-vehicle deals slipped to 57.80 percent.
Leasing activity for new vehicles remained stable near 24 percent.
The report provides deeper context on these evolving credit patterns and is available for on-demand viewing through Experian’s automotive resources. As the industry navigates ongoing challenges, the data signals that subprime borrowers are once again playing a vital role in sustaining vehicle sales momentum.