Subprime share is still below what it was before the pandemic, but there was an uptick in subprime auto loans and leases in the fourth quarter of 2025 versus the same quarter a year ago, according to the Quarterly Report on Household Debt and Credit from the Federal Reserve Bank of New York.
That’s a positive sign for dealers trying to get loans financed for borrowers with subprime credit, but it’s not evidence of a sustained rush to subprime, analysts said.
“It’s hard to take a signal from just one quarter,” said a New York Fed researcher, one of the report’s co-authors, in a conference call with reporters Feb. 10.
Auto loans, including subprime loans, vary seasonally. Also, an increase in subprime share may also reflect a decrease in another segment, the researcher said. Federal Reserve protocol is not to quote individual researchers by name.
Overall, total U.S. originations in the fourth quarter of 2025 totaled $181 billion, an increase of 3.4% vs. the fourth quarter of 2024, the New York Fed report said. Originations include financing for new and used cars, and loans and leases.
Subprime originations were $31.8 billion in the fourth quarter, an increase of 12.3% versus a year ago. The New York Fed defines subprime as credit scores below 620.
Other than subprime, originations increased in the fourth quarter for every other credit-score range except 720 to 759. That’s the prime-risk segment that’s just below what’s often called super-prime. The New York Fed defines the high end of prime as 760-plus, the report said.
Super-prime is by far the biggest segment, at 37.7% of originations in the fourth quarter of 2025, almost exactly even with a year ago.
To put the subprime segment in context, subprime share in the fourth quarter of 2025 was 17.6% of all originations, up from 16.2% a year ago. In the fourth quarter of 2019, before the pandemic, subprime share was 19.5%, according to the New York Fed.
Anecdotally, and in recent quarterly earnings calls, a few big, mostly prime-risk auto lenders and the big, publicly traded franchised dealership groups are talking about “discipline.” Lenders say they are keeping a lid on incentives, and the dealer groups say they’re refusing to sacrifice margins to chase volume.
Nevertheless, the general trend for the past two years has been a gradual increase in subprime share — a recovery from the pandemic and its aftermath, when new and late-model used cars were in much shorter supply than today.
For the past two years, the subprime share of loan originations has been up and down, but at least that’s an improvement from consistently down. For six quarters in a row, subprime share fell below the same quarter a year earlier, from the third quarter of 2022 to the fourth quarter of 2023, according to New York Fed data.
So, while the more recent trend in subprime share of auto loans is positive, it’s positive in comparison with lows of the recent past.
The authors of the New York Fed household report are Andrew Haughwout, Donghoon Lee, Daniel Mangrum, Joelle Scally and Wilbert van der Klaauw.
