Auto Lending Accelerates as Borrower Credit Quality Slips

Auto lending expanded during the second quarter of 2026, but Federal Reserve Bank of New York data suggests lenders may be extending credit to borrowers with weaker credit profiles.

Auto loan originations reached $211 billion during Q2, while outstanding auto loan balances increased $28 billion, or 1.7%, to $1.71 trillion. The median credit score for originated auto loans fell seven points.

The shift comes as auto loan delinquency remains elevated. The New York Fed reported that transitions into early auto delinquency ticked higher during the quarter, although serious delinquency remained stable.

The data does not indicate an auto lending crisis. However, rising originations, declining borrower credit scores and delinquency bears watching.

For lenders and collections departments, the performance of 2026 loan vintages could prove important. Credit deterioration takes time to emerge, meaning lending decisions may not affect collections portfolios for months.

Beginning in Q1 2026, the New York Fed switched from Equifax Risk Score 3.0 to VantageScore 4.0, so older scores should not be compared with current figures.

Source: CURepossession.com