New data shows consumers continuing to lean on longer loan terms to help maintain manageable monthly payments. According to Experian’s State of the Automotive Finance Market Report: Q1 2026, the percentage of new vehicles with loan terms more than six years old reached 35.55% in Q1 2026, up from 30.83% a year ago. Additionally, new loans with terms greater than 85 months increased from 2.95% to 3.33% over the same period.
A similar pattern was observed in the used vehicle market. The percentage of used vehicles with loan terms more than six years hit 31.54%, up from 28.60% in Q1 2025. Meanwhile, used vehicles with loan terms more than 85 months grew to 1.40% in Q1 2026, from 1.32% the year prior.
“Affordability continues to shape financing decisions across the automotive market,” said Melinda Zabritski, Experian’s head of automotive financial insights. “While shoppers continue to lean toward larger, more expensive vehicles, we’re seeing more consumers take advantage of longer-term loans to offset rising monthly costs.”
In the first quarter of 2026, the average loan amount for a new vehicle increased $2,150 year-over-year, reaching $43,925, while the average monthly payment for a new vehicle increased from $748 to $770 during the same period.
On the used side, the average loan amount saw an uptick of $785 from a year ago to $27,070 in Q1 2026, and the average monthly payment grew from $523 last year to $531 this quarter.
While the average monthly payment for new vehicles continues to rise, nearly 20% of new vehicles had an average monthly payment less than $500 in Q1 2026.
Automotive refinancing supports consumer affordability and lender performance
As interest rates steadily decline, refinancing has increasingly become an option for consumers looking to ease monthly payment pressures, as well as lenders hoping to find ways to offer more competitive rates.
In Q1 2026, on average, consumers trimmed 2.2% off their interest rate after refinancing. The average refinanced interest rate was 8.05%, down from 10.29%. This lowered the average monthly payment by $81 for consumers who refinanced during the quarter.
Interestingly, credit unions accounted for the largest share of automotive refinancing at 63.43%, from 62.31% in Q1 2025, compared to banks going from 23.51% to 22.59%. In addition, the payment difference when refinancing with credit unions was $101 this quarter and those who refinanced with banks saved $60.
Subprime segment continues to grow as credit access increases
During the first quarter of 2026, subprime borrowers made up 15.75% of total vehicle financing, an increase from 14.40% last year.
For new vehicle financing, the subprime market grew to 6.88% in Q1 2026, from 5.61% in Q1 2025. In used vehicle financing, the subprime market increased from 19.36% last year to 20.60% this quarter.
“While consumers are benefiting from improved refinancing conditions, we’re also seeing broader financing accessibility emerge,” Zabritski continued. “There continues to be increased momentum within the subprime segment as financing options expand across the automotive finance market.”
