Auto Lending Trends: Growth, Risk Shifts, and What the Latest Data Signals

Highlights: 

• Market dynamics are changing as banks significantly increase their auto portfolios (nearly 10% year-over-year growth) and are the primary drivers of growth in higher-risk segments, with subprime now representing nearly 22% of bank auto portfolios.
• Loan performance shows rising stress, with the overall 60+ days past due rate increasing from 1.6% to 2%, with banks experiencing a notable 14.4% rise in their 60+ days past due rate.

In our latest Auto Insights Report, we take a closer look at how the auto lending market is evolving across balances, originations, and credit risk. While overall growth remains relatively modest, the underlying shifts in lender behavior and borrower composition suggest a more complex and dynamic environment for lenders.

Market Growth and Changing Lender Dynamics

Total outstanding auto debt reached $1.7 trillion as of January 2026, representing a 0.9% increase year-over-year. At first glance, this metric points to a stable market. However, a deeper look reveals meaningful changes in how that debt is distributed across lender types.

Banks have expanded their presence significantly, growing their auto portfolios by nearly 10% year-over-year. They now account for more than one-third of all outstanding auto debt. In contrast, captive lenders, which remain the second largest segment at nearly 30% of total auto debt, reduced their portfolios by 13% over the same period. 

Smaller segments, such as those categorized as “monoline” and “dealer finance,” grew rapidly, increasing by 11% and 25% respectively, though from smaller bases. Together, these shifts indicate that market share is being redistributed, with banks taking on a more prominent role as captives pull back.

A Shift In Lending Portfolios

At the same time, there has been a notable change in the credit mix of auto lending. Deep subprime was the only credit tier to grow in 2025, increasing by 9.4% year-over-year. Banks were the primary driver of this growth, expanding their combined subprime and deep subprime portfolios by 17%.

As a result, subprime now represents nearly 22% of bank auto portfolios, a higher share than what is observed among captives or credit unions. This shift suggests that while banks are growing overall, they are also shifting the mix of their risk portfolio.

Origination Trends and Rising Loan Sizes

Origination trends reinforce this pattern. Through November 2025, total auto originations reached 23.4 million units, reflecting a 0.6% year-over-year increase. While unit growth has remained relatively flat, total origination balances grew more quickly, rising 4.9% to just shy of $710 billion. This surge indicates that loan sizes continue to increase, driven in part by higher vehicle prices and financing amounts.

Banks led origination growth with a 14.2% increase to 7.5 million units, while credit unions also expanded, growing 8.6% to 5.9 million units. Captive lenders moved in the opposite direction, with originations declining by 17.7% to 6.8 million units. Despite these shifts, the overall credit distribution of new loans remains heavily weighted toward the super-prime segment, which continues to account for the majority of both loans and leases.

Borrower Profiles and Generational Shifts

Borrower characteristics provide additional context for these trends. Origination volume remains concentrated among households earning between $100,000 and $250,000 annually. This group accounted for 3.6 million loans, with an average balance of $30,100. The relationship between income and loan size remains strong, with higher-income households consistently taking on larger balances.

Generational differences are also shaping the competitive landscape. Gen Z borrowers show a clear preference for credit unions and are more likely than other groups to use monoline lenders. Millennials and Gen X maintain a more balanced distribution across lender types, while Baby Boomers show the strongest preference for captive financing. These patterns highlight how lender positioning is shifting across demographic segments, creating both opportunities and competitive pressure.

Delinquency Trends and Portfolio Performance

Delinquency trends add another layer to the story. The 60+ days past due rate increased to 2% from 1.6% year-over-year, suggesting rising stress at the account level. At the same time, total delinquent balances declined slightly by 0.1%, suggesting that while more accounts are becoming delinquent, the size of those delinquencies may be stabilizing.

Banks experienced a notable increase in delinquency, with their 60+ days past due rate rising 14.4% to 1.7%. Other lender types saw improvements over the same period. Across credit tiers, delinquency rates declined compared to the prior year, pointing to improved performance within individual segments.

Looking Ahead

Taken together, this month’s data highlights a market that is stable on the surface but shifting underneath. Growth in auto debt and originations remains modest, yet the composition of that growth is changing. Banks are expanding more aggressively, particularly in higher-risk segments, while borrower behavior and preferences continue to evolve.

At the same time, delinquency trends suggest a partial return to normalcy, even as certain pockets of risk remain elevated. The increasing role of synthetic identity risk further underscores the need for a more comprehensive approach to credit evaluation.

Looking ahead, lenders will need to balance growth with careful risk management. Understanding not just how much the market is growing but where and how risk is accumulating will be critical to maintaining portfolio performance. In a market defined by shifting dynamics, a more complete and nuanced view of risk will be essential for long-term success.

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