Auto Lending in 2025: What’s Really Going On? 6 Trends to Know Now
Highlights:
- Dealer finance companies are experiencing rapid growth in auto debt, while banks continue to hold the largest share of total auto loan debt.
- Subprime and deep subprime loans are a significant portion of auto loan debt, with monoline lenders and dealer finance companies heavily involved in this category, and refinancing presents an opportunity for many borrowers.
If you’ve bought a car or are thinking about it, you might have noticed some big changes in auto financing. From rising loan amounts to different lenders dominating the market, there’s a lot happening under the hood. Every month, the Market Pulse Automotive Insights Report shares the latest automotive lending data and trends in today’s fast-paced market. Let’s break it down so you know what’s driving today’s auto loan trends.
Dealer Finance Is Growing Fast — Though Remains Small
Dealer finance companies are growing the fastest. In fact, they’ve seen a 21.7% jump in auto debt since last year. But even with that growth, their total loan amount is just $36.2 billion as of August 2025, which is still small compared to the big players.
Banks Still Rule the Road
Banks are still the top dogs when it comes to total auto loan debt, holding a whopping $567 billion. They’re also growing, with a 9.8% increase from August 2024. This suggests people seem to be using banks for their car financing needs — especially Generation X, who use banks more than any other group.
Subprime Lending: A Closer Look
Subprime and deep subprime loans, given to borrowers with lower credit scores, make up about 22.1% of all auto loan debt. While subprime auto debt is slightly down, deep subprime auto debt is up 8.7%, the biggest jump for any credit score band.
Dealer finance and monoline lenders are leaning heavily into subprime. Over 60% of their loans are in this category. In contrast, banks have 21% of their portfolio in subprime, which is still a 16% increase year-over-year.
Who’s Borrowing?
Between January and June 2025, over 12.7 million auto loans were opened, totaling $381 billion. Almost 45% of these borrowers make less than $100,000 a year, while 40% earn between $100,000 and $250,000. On average, people are financing about $30,000 per loan.
Younger buyers are showing interesting patterns too. Gen Z is more likely to use dealer finance and monoline lenders than older generations. Meanwhile, Gen X spreads their borrowing more evenly, with 32% using banks and captives and 25% turning to credit unions.
Are People Falling Behind?
The percent of borrowers who are 60+ days past due (DPD) on their loans is 1.9%, about the same as in August 2024. But not all lenders are equal:
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Monoline lenders have the highest delinquency rate at 16.6%.
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Dealer finance comes next at 5.6%.
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Banks sit at 1.6%, which is still nearly double what credit unions and captives report.
The most at-risk borrowers — deep subprime — have a 9.2% 60+ DPD rate, though that’s actually lower than last year.
Is It Time to Refinance?
One bright spot: refinancing. About 900,000 people with credit scores between 720 and 759 are stuck paying 9 to 11% APR on their loans. And get this: 60 percent of borrowers with a VantageScore above 680 and high APRs are ready to refinance and are twice as likely to take action.
The Road Ahead
While overall loan originations are down a bit in 2025 compared to last year (by around 138,000 loans), certain lenders are picking up speed. Captives still lead in loan volume with 4 million loans, but they’ve slowed down: 15% fewer than last year. On the flip side, banks and credit unions are seeing a 10%+ increase in originations.
Bottom line? The auto loan market is shifting, with new trends in who’s borrowing, who’s lending, and who might be looking for better deals. Whether you're shopping for a car or already have a loan, keeping an eye on these changes can help you make smarter financial moves.
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