Critical Shifts:
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Hybrids offer the lowest monthly payments: New hybrid vehicles provided the most affordable monthly loans ($646) and leases ($566) compared to both electric vehicles and traditional gasoline-powered cars.
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Used-car financing costs continue to rise: The average used-vehicle loan amount rose to $27,852, driving average monthly payments up to $542 despite a slight dip in interest rates.
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Refinancing yields significant monthly savings: Lowering interest rates through auto refinancing reduced buyers' payments by an average of $83 per month, helping ease overall auto debt burdens.
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Hybrids are gaining a larger share of the automotive financing market, while electric vehicle financing continues to lose ground, according to Experian’s State of the Automotive Finance Market Report: Q2 2026. Hybrids accounted for 16.8% of new-vehicle financing in Q2, up from 12.99% a year earlier. EV financing fell to 8.15%, compared with 9.21% in Q2 2025.
New hybrid vehicles had the lowest average monthly payment among fuel types in Q2, at $646 for loans. That compared with $692 for EVs and $721 for gasoline-powered vehicles. Hybrid leases also had the lowest average payment at $566 per month.
Experian says hybrids may be benefiting from consumers looking for better fuel economy, as well as manufacturer incentives that have made some hybrid models more affordable.
The broader financing numbers show why affordability remains a major consideration for used-car dealers. The average amount financed for a used vehicle reached $27,852 in Q2, up $875 from a year earlier. The average used-vehicle payment increased from $532 to $542 per month, even as the average interest rate declined from 11.57% to 11.19%.
New-vehicle financing remains considerably more expensive. The average new-vehicle loan reached $43,610, with an average payment of $765. For dealers working with payment-sensitive customers, the numbers highlight the importance of keeping the total vehicle cost and monthly payment within reach.
Refinancing Could Create Opportunities
Experian also reported that refinancing is becoming a more significant option as interest rates decline. The average refinance rate in Q2 was 7.97%, compared with a 10.40% average original rate. Consumers who refinanced saved an average of $83 per month.
For independent and BHPH dealers, refinancing can also become part of the longer-term customer relationship. A customer who improves their credit profile or qualifies for a lower rate may eventually have an opportunity to move into more favorable financing.
“The automotive finance market continues to evolve, and refinancing can give consumers another avenue to alleviate the monthly payment for their vehicle,” said Melinda Zabritski, Experian’s head of automotive financial insights.
The combination of rising used-vehicle loan amounts, higher monthly payments and shifting consumer interest in hybrids underscores the same issue facing much of the used-car market: affordability remains a key factor in keeping buyers in the market.
