NASHVILLE, Tenn. — Resilience in credit availability despite rising vehicle prices has led lenders to shift originating strategies to navigate affordability pressures.
When Auto Finance Summit East 2026 kicks off here today at the JW Marriott Hotel, it will bring together industry leaders, fintechs, auto lenders and dealers to discuss this and many other topics. In addition to affordability, issues including embedded finance, rising payment-to-income ratios and increased used-vehicle demand will be addressed.
Vehicle pricing, inflationary pressures challenge consumers
Many automakers’ vehicle sales declined year over year in April, as the new-vehicle average transaction price rose 3.5% YoY to $49,275 in March, according to April 9 Kelley Blue Book data.
New-vehicle sales at retailers Lithia Motors and Asbury Automotive also fell YoY in the first quarter amid weakened demand after a pull-ahead in sales in anticipation of new tariffs and expiration of the EV tax credit in 2025.
Consumers are facing rising vehicle prices and expecting a higher inflation rate over the next year, according to the New York Federal Reserve’s monthly Survey of Consumer Expectations published April 7. Interest rates also remain higher than pre-pandemic levels: The national average interest rate on a 60-month loan for a new vehicle was 6.69% as of April 20, down 105 basis points YoY but up from 5.17% on April 12, 2019, according to data analytics provider Curinos.
Resilience in credit performance
Despite elevated delinquencies among subprime borrowers, some lenders — including Capital One, Wells Fargo and PNC — reported YoY declines in delinquencies across their auto portfolios in Q1, according to the respective earnings releases.
The rate of delinquencies also rose YoY at a slower rate this Q1 than in Q1 2025 or Q1 2024, according to an April 30 TransUnion report. The rate of auto loans more than 60 days past due rose in Q1 to 1.57%, up from 1.56% in Q1 2025 and 1.5% in Q1 2024.
Increased subprime borrowing activity resulted in greater credit availability in March, according to Cox Automotive data published April 10. The DealerTrack Credit Availability Index rose 1.3% month over month to 102.4 in March, the index’s highest reading since June 2022.
Dynamic origination, underwriting strategies
Affordability pressures have pushed lenders to consider leasing and lease-like products in 2026.
Auto Financial Group added four credit unions to its balloon lending program according to a May 5 release. The program allows borrowers to make lower monthly payments and offers multiple end-of-term options, including returning the vehicle instead of paying a final balloon payment.
Bank of America and other lenders are leaning into longer loan terms to lower monthly payments for consumers. Nearly 43% of borrowers took out 84-month auto loans in March, according to refinancer Caribou’s auto refinance trends report published April 15. The share of 84-month auto loans on the platform rose 11% quarter over quarter in Q1.
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