Subprime vehicle financing reached its highest level in the fourth quarter since 2021

As the automotive industry continues to navigate affordability challenges and adjust to changing market conditions, subprime consumers re-emerge as a viable in-market shopper. According to Experian’s (LSE: EXPN) State of the Automotive Finance Market Report: Q4 2025, subprime borrowers made up 15.31% of total vehicle financing, up from 14.54% in Q4 2024. This represents subprime consumers’ largest share of the total vehicle finance market in the fourth quarter since 2021.

“Recent growth in the subprime segment reflects sustained consumer demand for vehicle financing, even as market conditions continue to shift,” said Melinda Zabritski, Experian’s head of automotive financial insights. “As affordability remains top of mind, both lenders and consumers are adapting, reflecting broader trends in credit patterns and vehicle financing behavior.”

For new vehicle financing, the subprime market grew to 6.61% in Q4 2025, from 5.74% last year. Meanwhile, there was a slight decline in prime, going from 36.49% to 35.33% in the same time frame. Similarly on the used side, subprime borrowers increased to 22.47% during the quarter, from 22.11% in Q4 2024, and prime went from 36.75% to 35.88%.

Financing trends in the current automotive market

In the fourth quarter of 2025, the average loan amount for a new vehicle increased $1,882 year-over-year, reaching $43,582. The average monthly payment for a new vehicle increased $21 to $767 during the same period, while the average interest rate was at 6.37% this quarter, from 6.34% last year.

Used vehicle financing saw a slight uptick in the average loan amount, increasing $872 from a year ago to $27,528 in Q4 2025. The average monthly payment increased to $537, from $528 and the average interest rate declined from 11.63% to 11.26% year-over-year.

As the average loan amount for new and used vehicles increased, data found growth in the longer loan term distributions. For example, the percentage of new vehicles with 73- to 84-month loan terms increased to nearly 30% in Q4 2025, from 26.03% in Q4 2024. The percentage of new vehicles with loan terms of more than 85 months was at 2.22% this quarter, from 1.84% last year.

Similarly, the percentage of used vehicles with 73- to 84-month loan terms went from 26.11% to 28.68% year-over-year, and the percentage of new vehicles with loan terms of more than 85 months increased from 0.95% to 1.03%.

“Despite shifts in average loan amounts and monthly payments, we’re seeing the market adapt,” Zabritski continued. “Consumers and lenders are finding ways, such as extending loan terms, to make the financing fall within a budget. It will be important to monitor how some of the trends evolve over the next 12-18 months.”

Additional findings for Q4 2025:

• Banks continued to lead the total automotive finance market share in Q4 2025 at 29.29%, followed by captives (27.55%), and credit unions (19.56%).
• Thirty-day delinquencies increased to 2.54% this quarter, from 2.45% last year and 60-day delinquencies went from 0.94% to 1.00% in the same period.
• The average monthly savings when refinancing a vehicle was $84 in Q4 2025, up from $73 last year.
• New vehicle financing slightly grew from 41.20% to 42.20% year-over-year, while used vehicle financing declined from 58.80% last year to 57.80% this quarter.
• New vehicle leasing remained steady, going from 24.87% in Q4 2024 to 24.37% in Q4 2025.

To learn more, watch the entire State of the Automotive Finance Market Report: Q4 2025 presentation on demand.

About Experian

Experian is a global data and technology company, powering opportunities for people and businesses around the world. We help to redefine lending practices, uncover and prevent fraud, simplify healthcare, deliver digital marketing solutions, and gain deeper insights into the automotive market, all using our unique combination of data, analytics and software. We also assist millions of people to realize their financial goals and help them to save time and money.

We operate across a range of markets, from financial services to healthcare, automotive, agrifinance, insurance, and many more industry segments.

We invest in talented people and new advanced technologies to unlock the power of data and to innovate. A FTSE 100 Index company listed on the London Stock Exchange (EXPN), we have a team of 25,200 people across 33 countries. Our corporate headquarters are in Dublin, Ireland. Learn more at experianplc.com.

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