CHICAGO—Auto lending picked up in the third quarter of 2025 as borrowers responded to lower interest rates and improved vehicle availability, though rising monthly payments and persistent credit stress continue to challenge the market, according to new data from the Credit Industry Insights Report.
Auto loan originations rose 5.2% year-over-year to 6.7 million in Q3, driven by strong growth in both super-prime borrowers (+8.4%) and subprime borrowers (+8.8%). Analysts noted that Federal Reserve rate cuts and stable dealership inventories helped fuel the rebound, even as tariffs and ownership costs weighed on affordability.
Payments continued to rise. The average monthly payment for a new vehicle climbed 3.0% year-over-year to $769, while used vehicle payments increased 3.3% to $538. Still, the market showed signs of normalization: the mix of financed vehicles—43% new and 57% used—closely matched pre-pandemic levels from 2019.
Delinquencies inched higher, with the share of accounts 60 days past due rising to 1.45%, up four basis points from a year earlier. Elevated delinquency rates among 2024 loan vintages, particularly in prime and below-prime segments, point to continued pressure on credit performance.
“Auto lending continued to expand in Q3 2025, supported by rate cuts and stable inventories, even as affordability and ownership costs remain key challenges. Consumer financing behavior is trending back toward pre-pandemic norms, with a balanced mix of new and used vehicle loans despite rising monthly payments,” said Satyan Merchant, senior vice president, automotive and mortgage business leader at TransUnion. “With the expiration of the EV tax credit in September 2025, we’ll be closely watching for a potential uptick in EV registrations in the prior months leading up to it, while also monitoring elevated delinquency rates among newer vintages for signs of credit performance pressure.”