I just got back from CBA Live, and the conversations around auto finance trends were eye-opening. If you’re a lender, banker, or finance professional, you’re navigating a market that’s changing fast. From shifting consumer behavior to rising delinquencies and a surge in EV leasing, here are three major trends that should be on every lender’s radar.
1. Cash is King, but Financing is Shifting Toward Older Vehicles
One of the biggest surprises in today’s market? More consumers are using cash for vehicle purchases. Historically, about 12-13% of new car buyers paid in cash, but now that number is up to 20% for new cars and nearly 50% for used vehicles.
But here’s the bigger shift: consumers are financing older cars at record levels.
- One in three vehicles purchased today is 9+ years old
- 15% of all franchise dealer sales are for cars that are at least nine model years old
- Many of these buyers are prime and super-prime borrowers
This is a huge opportunity for lenders. The assumption that older vehicles are mainly financed by subprime borrowers is no longer true. More prime consumers are looking at older vehicles, often due to affordability concerns. Lenders who haven’t considered expanding their financing criteria for older models could be missing out on a growing segment of creditworthy customers.
Takeaway: If you’re a lender, now is the time to evaluate your policies around older vehicle financing. Are you offering competitive terms for prime and super-prime borrowers in this segment?
2. Delinquencies Are at Record Highs, but Refinancing Is Set to Surge
The delinquency rate for auto loans is climbing fast—and in some areas, it’s worse than what we saw in the Great Recession. The biggest concern?
- 60-day delinquencies have hit a record high, surpassing 2009 levels
- More borrowers are rolling from 30 to 60 days past due, indicating worsening financial distress
- Lower self-curing rates, meaning fewer borrowers are able to catch up before serious delinquency
On the flip side, refinancing is poised for growth—but not just yet. Right now, the average time before a consumer refinances is 18-19 months, and while interest rates remain elevated, a drop in rates could unleash a wave of refinancing activity.
Credit unions have dominated auto loan refinancing, but banks and other lenders have an opportunity here—especially if they offer flexible options to help borrowers manage rising payments.
Takeaway: Lenders should be proactively identifying borrowers who might benefit from refinancing. While rates haven’t dropped yet, positioning your institution as a refinance leader will be key when the market shifts.
3. EV Leasing & Auto Fraud Are Growing Concerns
EV leasing is surging, particularly as consumers look to lower their monthly payments and hedge against rapid depreciation. Some highlights:
- 20% of all new leases in Q4 were EVs
- Leasing rates vary dramatically by model, with some EVs seeing 50%+ leasing rates
- The $7,500 federal tax credit plays a big role in lowering lease payments, making EVs more attractive in this structure
At the same time, auto finance fraud is becoming a bigger issue than credit card fraud. Title fraud, identity theft in private party transactions, and organized crime are all increasing in scope. Auto loan fraud is now outpacing credit card fraud, meaning lenders must stay vigilant.
One particularly concerning trend? Fraud rings targeting high-value vehicles and leveraging false identities to secure loans. Some groups are stealing entire truckloads of financed vehicles before the fraud is even detected.
Takeaway: If you’re in auto lending, it’s critical to invest in fraud prevention tools and risk assessment strategies, particularly for private-party auto loans and digital-first transactions. On the EV side, lenders should be looking at residual values, lease structuring, and long-term portfolio risk as more EVs enter the secondary market.
Final Thoughts: What Lenders Need to Do Next
The auto finance market is evolving faster than ever. Cash purchases, shifting financing trends, rising delinquencies, and EV growth are all reshaping how lenders need to approach their strategies.
- Are you adjusting your financing policies for older vehicles?
- Are you preparing for the next wave of refinancing demand?
- How are you mitigating auto loan fraud risks?
The lenders who adapt now will be the ones that win in this rapidly changing landscape.
What are you seeing in your lending business? Let’s continue the conversation so drop your thoughts in the comments!
