LAS VEGAS — Affordability is just as big a buzzword for auto lenders as it is for auto dealers, judging by discussions at the American Financial Services Association’s 2026 Vehicle Finance Conference & Expo.
“Affordability is a constraint for the market that’s keeping consumers on the sidelines,” Satyan Merchant, senior vice president, automotive and mortgage for TransUnion, said in a Feb. 1 “Industry Pulse” panel at the lender conference.
“2026 sales are pointing downward,” Merchant said during the panel. The biggest headwinds for 2026 sales are higher prices and economic uncertainty, he said.
According to TransUnion, a Chicago-based credit reporting bureau, average monthly payments and the average amount financed have increased for both new- and used-vehicle loans, despite interest-rate cuts by the Federal Reserve.
The net result is that the average used-vehicle monthly payment was almost the same as the average new-vehicle monthly payment was in the fourth quarter of 2019, just before the COVID-19 pandemic, Merchant said.
Another speaker on the same panel, Amy Martin, a managing director for S&P Global, said that on average across the entire industry, delinquencies don’t look too bad by historical standards and access to credit is good for most new-vehicle shoppers.
However, she said that while the overall share of loans to borrowers with subprime credit is relatively low, losses and potential losses for many subprime loans are on the rise, due to delinquencies and losses on bad loans.
Martin’s focus is asset-backed securities, backed up by auto loans and leases. In the so-called ABS market, lenders in effect originate auto loans and leases and then sell those loans to investors.
The investors get the income from the loans and leases as they are repaid, backed up by ironclad guarantees for repayment. The lenders get more money with which to originate additional loans and leases, instead of waiting to collect the loans as they are repaid.
Prime-risk lenders sell loans on the ABS market, but it’s not usually a main focus. On the other hand, ABS sales are highly concentrated among independent finance companies that specialize in subprime lending.
“Prime delinquencies and losses exceed pre-COVID levels, but remain below peak levels during the Great Financial Crisis” in 2008-2009, Martin said. The results for subprime households are “much worse,” she added.
Panelist Jeremy Robb, chief economist for Atlanta-based vendor Cox Automotive, said increases in other auto-related costs add to the perception that vehicles are unaffordable, including maintenance and repair, and parts and equipment — but especially auto insurance.
According to Cox Automotive, auto insurance costs have increased an average 12.7% per year, every year, for the past five years.
“This is why consumers feel the way they do” about affordability, Robb said.
