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.
