Affordability Is Shifting Auto Lending — Not Breaking It

Rising payments are changing what people buy. The operational cost shows up before the credit story does.

Most lender teams don’t experience “affordability pressure” as a headline. They experience it as a mix shift and a workflow problem.

When payments stay high, consumers make different choices—often leaning used—and even small changes in portfolio behavior can create outsized operational drag: more exceptions, more touches, and more time spent reconciling basics once an account starts to wobble.

Here are the signals worth paying attention to—and how to keep the operational cost from creeping up quietly.

Three questions lender leaders should ask right now

1) Is our book drifting more used-heavy than our operating model assumes?

Experian’s Q1 2025 data shows that used vehicles accounted for 56.71% of automotive financing (new vehicles accounted for 43.29%).

That’s not inherently “bad.” But if your policies, staffing, vendor model, and exception handling were built around a more new-heavy baseline, a used tilt can show up as friction—especially once accounts roll.

2) Are payments turning “normal” accounts into high-touch accounts faster?

TransUnion’s Q4 2025 data is a clean read on the payment reality:

• New average payment: $782 (up YoY)

• Used average payment: $538 (up YoY)

• Amount financed also increased (new $44,495; used $27,278, both up YoY)

High payments don’t just change loss expectations. They change operational volatility: more inbound contacts, more promise-to-pay churn, and more accounts that require earlier intervention.

3) Where is delinquency pressure actually building—and which side is driving it?

TransUnion reported the account-level 60+ DPD rate at 1.50% in Q4 2025, up slightly year-over-year, and noted the increase was driven more by used vehicles than new.

That matters because used-side stress tends to create disproportionate “work per account” once files stop moving cleanly.

A lender disclosure you can cite (without leaning on trade pubs)

Some banks describe their auto mix directly in filings. In PNC’s Q2 2025 10-Q, the bank notes its auto portfolio balance was 43% new and 57% used (at both June 30, 2025 and December 31, 2024). It also describes monthly performance measurement that includes collateral values and segmentation by credit metrics like FICO, LTV, and term.

You don’t need to extrapolate beyond that. The point is simple: heavy exposure is common enough that major lenders explicitly manage and monitor it.

Why a higher used mix changes downstream operations

This isn’t a doom story. It’s an operating reality story.

Originations / underwriting

Used collateral typically introduces more variability—value dispersion, condition, and more edge cases that don’t reconcile cleanly. In practice, that means:

• more exceptions per 100 apps

• more manual review time on borderline LTV/term combinations

• more documentation and record-matching issues

Servicing

If payments stay elevated, accounts can move from “fine” to “needs attention” with less warning. Servicing tends to see:

• higher contact volume per cure

• more rolling delinquencies (late → current → late again)

• more accounts hitting “special handling” buckets

Recovery / Remarketing

Used-heavy portfolios often produce a wider spread in timelines and outcomes. That shows up as:

• more outliers (not just a higher average)

• more cases where facts must be re-verified before action

• more sensitivity to timing when collateral value is less predictable

The Used-Mix Ops Watchlist (the metrics that catch cost creep early)

If you want to keep this operational—not theoretical—track these weekly and split them by used vs. new and by your key segments (tier, term, LTV):

1. Exception rate (per 100 accounts) + top exception reasons

2. Time-to-clear exceptions (median and 90th percentile)

3. Touches per account (internal + vendor)

4. Timeline variance (where the outliers are coming from)

5. Loss severity by segment (paired with time-to-action)

This makes the mix shift visible in the language ops teams actually live in: time, touches, rework, and variance.

Affordability isn’t forcing every lender into a credit pullback, but it is changing what shows up in the operation—more used mix, more variance, and more rework when files don’t move cleanly. The teams that stay ahead in 2026 will be the ones that measure that drag early and fix the repeatable failure modes before they become “normal.” If you treat used mix as an operating shift—not just a volume shift—you’ll protect cycle time, reduce touches, and keep costs from creeping up quietly.