After years on the sidelines, subprime borrowers are returning to the automotive finance market in a meaningful way. According to Experian’s State of the Automotive Finance Market Report: Q4 2025, subprime borrowers accounted for 15.31% of total vehicle financing in Q4 2025, up from 14.54% the prior year — the largest share since 2021.
The shift reflects a market adapting to persistent affordability pressures. The average new vehicle loan reached $43,582 in Q4 2025, with monthly payments climbing to $767 — a stretch for many households. As prime borrowers pull back or delay purchases, lenders are recalibrating their risk appetite to keep volume moving.
On the used side, the average loan amount rose to $27,528, and despite a modest rate decline, monthly payments still edged up to $537. Even the “affordable” option is getting more expensive.
For lenders, this trend is a double-edged opportunity. Expanding into subprime can drive growth, but it demands sharper underwriting and payment-flexibility strategies. Lenders are increasingly focused on how long-term borrowers are performing as a central pillar of their market strategies.
The bottom line: affordability constraints aren’t easing anytime soon, and the subprime resurgence signals both consumer resilience and a lending landscape willing to meet them where they are.
