The Auto Finance Roadmap

The auto asset-backed securitization market remains resilient as a funding outlet for many issuers and originators. 

“It's an important source of capital for us,” Michael Gustafson, chief financial officer at lender Arivo Acceptance, tells Auto Finance News. “The primary driver for us is getting critical mass and building up the portfolio to drive the right economics in securitization."

West Valley City, Utah-based Arivo in July closed a $221 million transaction backed by nonprime and subprime auto loans, marking its first ABS deal of 2026 and seventh overall. The company had penciled in an ABS deal for late Q2, lar...

Ally Financial, Capital One and Huntington Bank posted mixed results in the second quarter for auto originations and credit performance.  

Ally Financial’s auto originations rose 20.9% year over year in Q2 to $13.3 billion, while Capital One's auto originations increased 18.9% YoY to $12.9 billion. Huntington Bank's auto originations, however, decreased 39.1% YoY to $1.4 billion.  

Delinquencies were also mixed, with the rate of auto loans 30-plus days past due down YoY at Ally and Capital One but up at Huntington. The auto net charge-off rate rose YoY at Capital One and Huntington but declined at Ally.  

Tesla, meanwhile, produce...

National and regional bank second-quarter earnings point to mixed performance as larger banks lean into auto production while regional banks held steady or scaled back amid market volatility.  

Wells Fargo Auto, for one, reported a 40.6% year-over-year increase in originations in Q2, while Chase Auto's originations rose 8.9% YoY. Bank of America's auto book shrank. 

Regional banks saw improvement in auto portfolio delinquencies, but portfolio growth was mixed. Fifth Third Bank's 30- to 89-day delinquencies across its indirect secured consumer portfolio, made up of 84% auto loans, fell 11 basis points (bps) YoY, though net charge-offs inched up 3 bps YoY. 

U.S...

Subaru Motors Finance plans to expand its underwriting to attract more first-time buyers, Managing Director Michael Cottone tells Auto Finance News in the latest episode of “The Auto Finance Roadmap Podcast.”

“We are extremely low when it comes to delinquencies; the FICO scores are very high, the income levels are high,” he says. “We’re looking to try and find more buyers for the Subaru brand. We’re trying to look at where we can expand credit policies … especially looking at the younger demographic.”

Cottone pointed to Subaru’s college graduate financing program, which, according to S...

BMW Financial Services’ lease penetration has normalized following the elimination of the federal electric vehicle tax credit, says Ole Jensen, chief executive and president of the captive in North America.  

“We [have] slightly higher penetration when it comes to [battery EVs] in terms of leasing, because a lot of people [are] maybe uncertain about if they like the car, if they like the technology. They want to have the option of returning the car,” he says, adding that battery life concerns remain even as 3-year-old EVs come back to the manufacturer with 95% of battery life remaining. 

The cap...

Car buyers are facing a tough market as rising insurance costs add to vehicle ownership expenses and lenders are mindful of high loan-to-value ratios.  

The national six-month auto insurance premium rose 7.5% year over year to $1,163 in May, with the average up 20.6% YoY to $1,263 in the first quarter. Individual borrowers’ insurance premiums are difficult for auto lenders to track, creating a challenge as insurance payments take up a larger portion of consumers’ budgets.  

Amid high insurance and vehicle costs, first-time car buyers are navigating challenges in securing financing as lenders are cautious regarding high loan-to-value ratios and limited cr...

Auto retailers are gaining momentum on the heels of increased sales and finance volume even as the industry navigates continued affordability headwinds.  

Carvana last week opened its first test-drive center in Dallas after acquiring seven Stellantis dealerships to expand into new-car sales.  

The Tempe, Ariz.-based retailer sells new and used vehicles online and reported a 40% year-over-year increase in retail sales in the first quarter to 187,393 units.  

Retailer CarMax also reported a 3.3% YoY uptick in combined retail and wholesale used-vehicle sales in Q1, while CarMax Auto Finance’s originations rose 5.5% YoY to $2.4 billion.  

From an affordability pe...

Carvana has lowered its interest rates as its profitability, sales and finance volume improve. 

The Tempe, Ariz.-based retailer in the past year has focused on expanding inventory to meet consumers’ needs as car prices rise, improving customer experience and using AI to streamline transactions, Matt Dundas, vice president of finance, tells Auto Finance News during a special episode of “The Roadmap” podcast.  

The efforts, he says, are in line with the retailer’s goal to sell 3 million units per year in the next five to 10 years at a 13.5% adjusted EBITDA margin.  

“On that profitability piece...

AI-powered research tools are changing how consumers shop for powersports vehicles, prompting dealers to spend more time explaining financing options and correcting misconceptions about rates, promotions and pricing. 

Consumers are increasingly arriving at dealerships with information gathered from online searches and AI platforms, creating both opportunities and challenges for finance managers, Fun Bike Center Motorsports Finance Manager Samer Fidy tells Auto Finance News during an episode of “The Roadmap” podcast. 

“They’re coming to confirm the research that they’ve done online,” he says. 

At the same time, affordability remains a key factor in powersports...

Used-car financing gained ground in the first quarter as affordability pressures continued to push consumers away from higher-priced new vehicles. 

Used vehicles accounted for 58.6% of all auto financing in Q1, up from 58.2% a year earlier and marking the first Q1 increase since 2023, according to Experian.  

The shift underscores a broader affordability challenge facing the auto industry as average used-vehicle loan amounts rose 3% YoY to $27,070, while average monthly payments increased 1.5% YoY to $531. 

New vehicles remained considerably more expensive, with average loan amounts hitting $43,925 and monthly payments climbing 2.9% YoY to $770. 

As consumers look for...

The higher cost of living is exacerbating affordability concerns and prompting auto lenders to take a close look at rising delinquencies, asset pricing and innovative programs to get consumers into vehicles.  

The inaugural Auto Finance Capital Summit in Nashville, Tenn., highlighted lenders’ reliance on diversified funding sources across asset-backed securitization (ABS), warehouse lending and private credit.  

Pagaya Technologies, for example, is increasing issuance in the auto ABS market as the private credit markets face increased volatility amid rising losses and a call for more transparency. 

Losses also rose across securitized nonprime auto loans as issuers continue to n...

Powersports dealers are introducing financing discussions earlier in the buying process as affordability concerns and economic uncertainty shape consumer behavior during the industry’s peak selling season. 

May is one of the most important sales periods for powersports dealers as warmer weather drives demand for motorcycles, ATVs and side-by-sides, Synchrony Outdoors Senior Vice President and General Manager Susan Medrano told Auto Finance News during a special episode of “The Roadmap” podcast.  

“It’s important because that buying window for peak season is so narrow,” she said. “If the consumer doesn’t purchase during that window, they may not purch...

In the first quarter, the auto finance industry balanced strong auto loan originations with persistent affordability challenges, shifting EV demand and rising asset-backed securitization activity. 

Auto lenders, including PenFed Credit Union, Driveway Finance and Carvana posted strong first-quarter gains, signaling continued demand for auto loans, according to their earnings releases last week. PenFed’s originations jumped 88% year over year, while Driveway Finance’s originations rose 34.8% YoY and Carvana’s originations increased 59.3% YoY as digital sales and product expansion drove growth. 

Affordability, however, remained a key constraint with Q1 earnings for dealership groups, including Asbury Automotive Group, G...

Consumer budget concerns are driving year-over-year surges in auto refinance applications, Strati Papageorge, senior vice president of product at PNC Financial, tells Auto Finance News in the latest episode of “The Auto Finance Roadmap” podcast.

“Affordability is No. 1, the biggest reason that consumers are coming to us,” to refinance, he said. “It helps with monthly payment.”

PNC reported a 60% YoY jump in auto refinance activity in 2025 and saw similar YoY growth in the first quarter of 2026, Papageorge says.

OpenRoad Lending’s refinance application volume surged 30% YoY in Q1 amid sustained new-vehicle price hikes and heightened...

Lenders’ auto originations were mixed in the first quarter, though most reported declining delinquencies.

Originations reported by major banks include:

Bank of America did not break out auto originations. However, its indirect and direct consumer outstandings, primarily consisting of auto and specialty lending loans, fell 0.4% YoY to $53.9 billion. Ally, Chase, U.S...

Auto lenders and dealers are navigating mounting pressure in 2026 as inflation, geopolitical conflict and regulatory shifts weigh on profitability and consumer behavior. 

Auto lenders are responding to tighter margins by strengthening dealer relationships and expanding into full-spectrum financial services. Technology also continues to improve efficiency and credit decisioning, resulting in increased applications and more ways for dealers and lenders to collaborate to improve profitability amid affordability concerns. 

U.S. inflation surged in March, with the consumer price index rising 0.9%, the largest monthly increase since 2022, driven by higher gasoline prices amid the Iran war. The added ch...

Auto lenders are working to balance growth against rising credit and affordability pressures as the market adjusts to shifting consumer behavior in 2026. 

Luxury vehicle financier Rizz Lending this month secured a $300 million warehouse facility to scale originations to about $200 million this year. Meanwhile, fintech lender Lendbuzz is targeting 20% growth in originations by adding near-prime borrowers and using cash-flow-based underwriting.  

Meanwhile, other players, including Credit Acceptance Corp., remain focused on underserved consumers, a segment of more than 90 million Americans.  

Consumers are also adjusting to affordability constraints by changing their approach to car buying. Down pay...

Continued concerns around the Iran war and an increase in fraud schemes are placing more stress on auto lenders, dealers and consumers while driving shifts in risk management and strategy. 

The war has pushed oil prices above $100 per barrel, fueling inflation and widening auto asset-backed securities (ABS) spreads. Prime spreads have widened by up to 17 basis points, increasing funding costs and tightening credit conditions. Higher fuel costs are also squeezing consumers, especially subprime borrowers, reducing disposable income and raising delinquency risks.  

Those increased risks for subprime borrowers contributed to a 130% year-over-year jump in refinance activity in...

AI adoption is changing how auto finance companies approach efficiency gains and how the industry scales, Sanjiv Yajnik, president of financial services at Capital One, tells Auto Finance News in the latest episode of “The Auto Finance Roadmap” podcast.  

“The rate at which we are innovating right now, given AI, is unbelievable,” he says.

Technology and AI-based tools are making processes faster and less expensive, Yajnik says. “People do research in a different way,” he says. “They can find things in a different way. It's much faster.” 

On the other hand, technology is contributing to shifts in the industry’s...

The auto finance industry continues to navigate heightened economic uncertainty as the Iran war drives oil prices higher, adding pressure to consumers already facing elevated vehicle prices and borrowing costs.  

Crude oil prices surged above $100 per barrel to end last week amid fears of supply disruptions around the Strait of Hormuz, a critical route for roughly one-fifth of global oil shipments, according to market researcher Energy Aspects’ data. The spike, which continued into today, pushed U.S. gasoline prices higher and increased volatility across financial markets. 

Higher fuel prices are adding to affordability challenges that have...

Despite a rise in subprime financing share in the fourth quarter of 2025, affordability remains a key focus for auto lenders and dealers as lower-income consumers continue to be disproportionately affected by higher everyday costs. 

Subprime share of total vehicle financing in Q4 2025 stood at 15.3%, up from 14.5% a year earlier, according to Experian data. Prime borrowers continued to lead market share for new-vehicle financing as subprime customers remain challenged by high vehicle costs, but Federal Reserve interest rate cuts and tax refunds will potentially bring some relief in 2026. 

Affordability challenges contributed to a slowdown in retail vehicle sales...

Auto lenders are eyeing AI and other digital technologies amid continued industrywide concerns over affordability pressures.

Chase Auto will deploy AI that can fully automate the contract booking and funding process in 2026.

AI-powered Fintech Agora Data closed a deal on Feb. 26 with blockchain-based platform provider Figure Technologies to tokenize auto loans into real-world assets for investors. The deal will reportedly improve liquidity by increasing access to investors and providing less expensive financing compared to other forms of investment, according to S&P Global.

Lenders are also embracing AI and digital tools to empower...

Drivers underestimate the cost of owning a vehicle by nearly $4,500 a year, underscoring mounting affordability pressures across the auto market. 

There is a growing disconnect between consumer expectations and the rising expenses tied to maintenance, repairs, insurance and everyday vehicle use, Keith Mait, senior vice president and general manager of Synchrony Financial’s auto business, told Auto Finance News during a special episode of the “Weekly Wrap” podcast. That was among results of the lender’s survey, released Feb. 17, that polled 1,030 U.S. adults responsible for a vehicle’s upkeep via the Ask Suzy online platform. 

“We see it...

Auto dealers and lenders are looking to new technologies and ventures to grow operations as the retail auto market faces uncertainty, especially around used vehicles and EVs, in 2026. 

Dealer captive financier AutoNation Finance’s originations rose 66% year over year in 2025. Meanwhile, the retailer’s full-year finance and insurance revenue increased 7.7% YoY to $1.5 billion, which represented 5.3% of total revenue and 29.6% of total gross profit, according to the company’s earnings release. 

Additionally, AutoNation Finance is looking to improve call center operations with the deployment of Balto AI, while Capital One also aims to boost call centers with AI...

Auto and powersports financiers mostly reported lower originations and sales for the last quarter as shifting spending patterns by cash-strapped consumers fuel uncertainty. 

Lenders that reported fewer sales and loan originations, according to their respective earnings releases, include: 

However, some fin...

Banks reported growth in auto originations in the fourth quarter as credit performance was mixed.  

Auto originations at Ally Financial, Capital One, Chase Auto, U.S. Bank and Wells Fargo increased year over year, according to the banks’ earnings reports. 

The increases were:  

Ally’s originations rose 4.9% YoY to $10.8 billion; 

Capital One’s originations increased 8.5% YoY to $10.2 billion; 

Chase Auto’s originations ticked up 1.9% YoY to $10.8 billion; 

U.S. Bank’s indirect loan and lease production, mostly comprised of auto loans, grew 2.7% YoY to $1.4 billion; and 

Wells Fargo Aut...

Gaps in data verification likely contributed to missed double-pledging of assets at Tricolor Auto, prompting changes at rating agencies, Larry Chiavaro, president at his consulting company LC Advisors Group, told Auto Finance News during a special recording of the Weekly Wrap podcast.  

Chiavaro also served as executive vice president and co-founder of First Associates Loan Servicing from 2010 to 2021. That company was rebranded as Vervent in 2020. The backup servicer took over Tricolor’s portfolio following the company’s Sept. 10 bankruptcy filing.  

Tricolor is under investigation for allegations of fraudulently double-pledging assets to warehouse lines, with former Tricol...

Auto dealers are expecting a strong tax season to spur a sales jolt early this year, but lenders and dealers are split on their full-year outlook amid rising vehicle prices and macroeconomic challenges facing consumers.  

Other factors that market participants are monitoring include how fluctuating interest rates and unemployment will affect consumer affordability and car sales. 

In fact, December 2025 sales were projected to fall 3.5% year over year to 1.4 million, according to Cox Automotive. Those figures will be released later this month. 

However, 2025 new-vehicle sales reached the best level in six years, according to a C...

An uptick in repossessions, continued affordability challenges and weakened credit performance are top of mind for lenders headed into 2026.  

The shutdown of several lenders this year combined with inflationary pressures is likely to contribute to more repossessions at the end of 2025 and in early 2026. By Dec. 31, repossession assignments nationally are projected to surpass 10.5 million units for the year, according to American Recovery Association data.  

At the same time, credit performance continued to worsen across securitized nonprime auto loans in November while prime loans had some deterioration. This bifurcation in credit tier performance is expected to continue next year.  <...

New identification requirements for vehicle registrations in Texas have prompted concerns from dealers and lenders about a potential increase in unregistered or uninsured cars on the road. 

The Texas Department of Motor Vehicles in a Nov. 19 bulletin clarified that documentation required to register vehicles or renew registrations cannot include expired IDs and that passports issued by a foreign country must include documentation proving lawful admission to the U.S. The changes could hamper vehicle sales and lead to an uptick in illegally operated cars, creating collateral risk for auto lenders. 

In the wider market, credit access improved...

Electric vehicle sales declined at most major manufacturers in November on the heels of an uptick in EV share of total new-car sales in the third quarter, due in large part to a pull-ahead of purchases before the federal EV tax credit expired.  

Automakers including American Honda, Ford Motor, Hyundai, Subaru and Toyota reported double-digit year over year declines in EV sales during the month, while overall sales were mixed. EV sales slowed in November but in Q3 benefited from consumers wanting to take advantage of the federal tax credit of up to $7,500 before Sept. 30, contributing to a...

Bankrupt subprime retailer Tricolor’s 10,000 remaining vehicles may be sold by March 2026 if trustee Anne Burns’ motion is approved.

Tricolor backup servicer Vervent and vehicle management company Holman will sell all remaining vehicles, if the motion is approved by Judge Michelle Larson. This includes vehicles that may belong to Tricolor’s creditors, through third-party auctioneers, according to court documents.

The proposal came ahead of former Tricolor Chief Executive Daniel Chu’s motion seeking to shore up $15 million in legal defense funds, according to U.S. Bankruptcy Court of the Northern District of Texas Dallas Division court do...

Last week brought more shakeups in the auto finance industry as lender Flagship Credit Acceptance announced it was finalizing a sale of the company to an investment firm, while Prestige Financial Services stopped originations.  

Chadds Ford, Pa.-based Flagship announced on Nov. 21 that it had entered into an agreement to sell the business to New York-based InterVest and would be rebranded to Flagship Financial Group, according to a company release. Once the transaction is closed, Jim Landy will become chief executive.  

Prestige Financial Services also informed dealerships that it was stopping originations as of Nov. 20, ac...

The compliance industry continues to face headwinds as funding for the Consumer Financial Protection Bureau is in jeopardy after the Department of Justice recently ruled that the bureau cannot request money from the Federal Reserve. 
The DOJ’s Nov. 7 ruling states that the “combine earnings of the Federal Reserve system” — laid out by the Dodd-Frank Act as the source of most of the CFPB’s funding — refers to Fed profits. The Fed was last profitable in 2022. 
It is unclear if the CFPB will be operational in January 2026. The bureau can request funding from Congress, but approval is uncertain.

Auto retailers and fintechs mostly reported growth in the third quarter amid mixed October retail sales, flat vehicle values and some layoffs. 

CarMax named David McCreight as its interim president and CEO, replacing Bill Nash, effective Dec. 1. Nash is not retiring, and the shakeup comes as the Richmond, Va.-based retailer’s comparable store used-vehicle retail sales are expected to drop between 8% and 12% year over year in the third quarter of its fiscal 2026, according to CarMax’s Nov. 6 release. 

Meanwhile, EV makers Lucid Motors and Rivian saw deliveries jump 46.6% YoY and 31.8% YoY, respectively, in the third...

Auto lenders are homing in on key areas of underwriting to manage risk and grow in 2026 as the subprime market continues to face challenges with credit performance and affordability.

Improved loan decisioning, declining interest rates, the use of data and analytics, and responsible growth are top of mind for auto lenders into next year, leaders said at the recent Auto Finance Summit 2025.

The Federal Reserve cut its benchmark interest rate by another 25 basis points (bps) on Oct. 29, prompting lenders to prepare for an uptick in refinance opportunities. However, affordability remains a leading concern, especially for...

Investors are seeking more transparency following Tricolor’s Chapter 7 bankruptcy filing last month, which has also prompted several auto lenders to review their books and assure investors of loan quality and operational health.  

The auto finance industry and asset-backed securitization issuers could benefit from more transparency and consistency in disclosure policies, panelists said during a session on Oct. 21 at FT Live’s ABS East in Miami. 

Auto lenders are reviewing their portfolios following allegations levied against Tricolor for double-pledging of assets on its warehouse lines of credit. Ford Credit reviewed its millions of contracts to confirm...

Auto Finance Summit 2025 shed light on how auto lenders are responding to challenges facing the wider market, including credit performance, affordability and evolving technologies. 

Following subprime buy here, pay here lender Tricolor’s Sept. 10 Chapter 7 bankruptcy filing, auto asset-backed securities spreads widened, Kayvan Darouian, director of consumer asset-backed securities research at Deutsche Bank, said during an Oct. 15 presentation at the event. Still, Tricolor’s challenges do not represent issues facing the wider market, he said. 

Further, subprime share has “come back in the last 12 months,” and lenders should be competitive in the near prime sector, Scot Hense...

The powersports industry continues to grapple with volatile market conditions including rising prices, falling sales, waning consumer demand and a rapidly changing compliance landscape, but there are some lenders and dealers who have proven themselves resilient.  

Auto Finance News today announced 11 powersports executives to watch heading into 2026 who have thus far proven their ability to support lenders, dealers and consumers in a political and economic climate that is also rapidly changing. 

Dealers and lenders are leaning into the used market to drive sales and overall growth in the fourth quarter and heading into next year. In...

A federal investigation into subprime auto lender Tricolor Holdings was confirmed as court proceedings began last week.  

In a court hearing on Oct. 3, Tricolor’s lawyers confirmed that federal law enforcement and regulatory agencies are investigating the buy here, pay here dealer and subprime lender for alleged misconduct and alleged systemic fraud. 

Since Texas-based Tricolor’s Chapter’s 7 bankruptcy filing on Sept. 10, the company’s bond prices have plummeted, signaling that investors believe there is an increased risk of losses, particularly in riskier tranches. 

Meanwhile, third-quarter sales among auto makers climbed as OEMs pushed ince...