Leasing Continues to Decline in Q2 2022 Amid Inventory Shortages

The automotive market is entering a new phase defined not just by what consumers are buying, but by how they’re choosing to finance it. According to Experian Automotive’s State of the Automotive Finance Market Report: Q1 2026, nearly one-third (35.55%) of all new vehicle loans now stretch more than six years, up from 30.83% in Q1 2025. Similarly on the used side, 31.54% of loans extended more than six years, an increase from 28.60% last year. The shift highlights why affordability is reshaping how consumers are financing their vehicles, particularly in larger and higher-priced vehicles. Refinancing gains traction as interest rates stabilize In addition to longer-term loans, consumers are becoming increasingly deliberate with their financing decisions and managing monthly payments as refinancing activity has gained momentum. For instance, consumers who refinanced this quarter lowered their interest rate by 2.2% and saved an average of $81 on their monthly payment. Credit unions, in particular, continued to play a major role in helping consumers secure more affordable payment options. In Q1 2025, credit unions accounted for the lion’s share of automotive refinancing at 63.43%, from 62.31% a year ago. By comparison, banks went from 23.51% to 22.59% year-over-year. Furthermore, those who refinanced with a credit union saved an average of $101 this quarter, whereas those who refinanced with banks saved $60. Expanding credit access through flexible financing Another notable trend this quarter was the incessant growth in subprime financing as credit accessibility across the market continues to increase. In the first quarter of this year, subprime borrowers made up 15.75% of total vehicle financing, from 14.40% last year. For new vehicles in particular, the subprime market went from 5.61% to 6.88% year-over-year, while subprime in used vehicle financing grew to 20.60% this quarter, from 19.36% a year ago. Increased activity in the subprime segment highlights continued confidence in the automotive market and underscores the importance of expanded financing options. As consumers seek greater flexibility with financing decisions that fit their lifestyle, lenders and dealers have the opportunity to approach them with more personalized solutions. These trends are helping keep both new and used vehicle markets moving forward, while creating new opportunities for consumers to manage payments and purchase confidently. To learn more about automotive finance trends, view the full State of the Automotive Finance Market Report: Q1 2026 presentation on demand.

  As vehicle prices and interest rates continue to evolve, both consumers and lenders are recalibrating their approaches to affordability and long-term sustainability. This shift has resulted in the subprime segment growing to its largest share of total finance market for subprime in the fourth quarter since 2021. According to Experian’s State of the Automotive Finance Market Report: Q4 2025, subprime borrowers accounted for 15.31% of total vehicle financing, an increase from 14.54% in Q4 2024. To understand why the subprime space is evolving, we took a deeper dive into the affordability picture and how changes in pricing and interest rates are influencing both consumer decisions and lender strategies. In Q4 2025, the average loan amount for a new vehicle increased $1,882 from the prior year to $43,582, and the average interest rate for a new vehicle went from 6.34% last year to 6.37% this quarter. As a result, the average monthly payment increased from $746 to $767 in the same time frame. On the used side, the average loan amount increased $872 year-over-year, reaching $27,528 in Q4 2025. However, despite the average interest rate declining from 11.63% to 11.26% during the same time, the average monthly payment grew $9 from last year to $537 this quarter. These changes are prompting thoughtful adjustments across the automotive ecosystem. Consumers are comparing financing options more carefully and adjusting loan terms when necessary to prioritize the cost of ownership. Lenders are also focusing more on payment flexibility and how long-term borrowers are performing as they leverage it for central pillars of strategies to stay ahead of the ever-evolving market. To learn more about automotive finance trends, view the full State of the Automotive Finance Market Report: Q4 2025 presentation on demand.

Financial services leaders are dealing with numerous pressures at the same time. These growing challenges for financial services organizations include sophisticated fraud, rapid Artificial Intelligence (AI) adoption without clear regulatory direction, rising customer expectations and the need for compliant, sustainable growth. Businesses are rethinking how they manage risk, growth and customer trust. These financial industry challenges are no longer confined to internal risk teams. They directly impact long-term customer loyalty. How organizations navigate these challenges will determine how effectively they deliver value to their customers. We’ve outlined the six challenges for financial services oranizations that consistently rank highest among industry leaders today. Challenge 1: Fraud is becoming harder to detect and eroding customer trust 72% of business leaders expect AI-generated fraud and deepfakes to be major challenges by 20261 As fraud tactics evolve quickly, driven in part by AI, customers are being targeted through identity-based attacks from account takeovers to synthetic identities and misuse of personal information. When these threats go undetected, or when legitimate activity is incorrectly flagged, the result isn’t just financial loss. It’s a breakdown of trust. Organizations that want to stay ahead must move beyond isolated fraud controls. By embedding identity management and monitoring into the customer experience, organizations can move from reactive fraud response to proactive identity protection. Identity theft protection and monitoring help organizations turn fraud prevention into a visible, trust-building experience for customers — offering early alerts, guidance, and peace of mind when identity risks arise. Challenge 2: AI decisions must be trusted by customers, not just regulators 76% of businesses say implementing responsible AI is one of their biggest challenges2 As AI becomes more embedded in financial services, it shapes the experiences customers see every day. From credit decisions to eligibility outcomes and personalized offers. While AI can drive faster and more inclusive decisions, it also introduces a new expectation: customers want to understand why a decision was made. Responsible AI is no longer just about regulatory compliance. It’s about delivering outcomes that feel fair, consistent and easy to understand. When decisions appear unclear, confidence erodes. When organizations can clearly explain outcomes, not just internally, they build confidence across regulators, partners and customers. This allows AI to scale responsibly while reinforcing trust in every interaction. Financial wellness tools such as credit scores, reports and education help make AI-driven decisions more transparent, giving customers clarity into outcomes and confidence in how their financial health is assessed. Challenge 3: Digital experiences are failing to deliver clarity and confidence 57% of U.S. consumers remain concerned about conducting activities online3 Customer confidence is affected by day-to-day interactions such as onboarding, payments and issue resolution. Inconsistent decisions, unclear outcomes and friction in digital journeys can quickly erode confidence and increase confusion, disengagement and abandonment. Financial services leaders will need to rebuild and strengthen confidence. Improving key decision points with better data and analytics helps ensure customers receive timely insights, understandable outcomes and meaningful guidance, turning everyday interactions into opportunities to build stronger relationships. By delivering ongoing financial wellness insights and education, organizations can replace confusion with clarity — helping consumers better understand their financial standing and stay engaged over time. Challenge 4: Gen Z continues to raise the bar It's no secret that Gen Z stands out for its strong preference for digital financial services and digital interactions, but Gen Z is also pushing the envelope on financial wellness. 48% of Gen Z report that they do not feel financially secure, indicating strong demand for financial support and tools4 Their expectations for instant decisions, seamless digital experiences, transparency and tools that help them manage their financial lives are quickly becoming the baseline. To meet and exceed these expectations, financial institutions will need to support real-time, data-driven decisioning that adapt to individual needs. Delivering modern, app-like financial experiences, without compromising risk management. Increasingly, organizations are meeting Gen Z expectations by offering financial wellness and protection tools through employee benefits, supporting everyday financial confidence beyond traditional compensation. Challenge 5: Limited data limits meaningful consumer engagement 62 million U.S. consumers are thin-file or credit invisible under traditional credit scoring.5 Growth will always be a priority, but it must be responsible and inclusive. Traditional credit data alone often provides an incomplete picture of consumer financial behavior, limiting visibility and making it harder to confidently expand access. By incorporating alternative and expanded data, organizations can gain a more holistic view of consumers. This broader perspective supports smarter decisions, personalized insights and more inclusive engagement, which enables growth while maintaining compliance and managing risk responsibly. Expanded data supports more personalized financial wellness experiences, enabling organizations to provide relevant insights, responsible access and guidance tailored to individual consumer needs. Challenge 6: Disconnected decisions create inconsistent customer experiences Increasingly, fintech leaders are moving toward unified risk and decisioning strategies to deliver more personalized experiences6 While customers interact with a single institution, decisions are often made across disconnected data sources, systems and teams. These silos create inconsistent experiences, slow responses and operational complexities that customers feel directly through conflicting messages and uneven outcomes. Experian helps organizations break down these silos by unifying data, analytics and decisioning across the enterprise. When data incidents occur, integrated experiences enable faster data breach resolution, helping consumers understand what happened, take action, and recover with confidence. Looking ahead These challenges for financial services organizations are not emerging; they’re already here and reshaping how financial institutions engage with consumers. Leaders who proactively address financial industry challenges by connecting data, analytics, and responsible AI are better positioned to deliver trusted, transparent and meaningful experiences. Learn More References:1. https://www.experian.com/blogs/insights/2025-identity-fraud-report2. https://www.techradar.com/pro/businesses-are-struggling-to-implement-responsible-ai-but-it-could-make-all-the-difference3. https://www.experian.com/blogs/insights/2025-identity-fraud-report4. https://www.deloitte.com/global/en/issues/work/genz-millennial-survey.html5. https://www.experian.com/thought-leadership/business/the-roi-of-alternative-data6. https://us-go.experian.com/2025-state-of-fintech-report?cmpid=IM-2025-state-of-fintech-report-livesocial-share