Auto lenders balance growth with rising credit, affordability pressures

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 payments declined in the first quarter while loan balances rose, and longer-term financing – including 84-month loans – reached record levels. Meanwhile, fewer consumers are applying for auto loans even as rejection rates decline, signaling softer demand.

At the same time, credit conditions continue to tighten. Canada’s goeasy, a subprime lender, reduced its auto exposure and tightened standards after charge-offs surged.

Lenders also pointed to weak dealer data and rising subprime delinquencies as ongoing risks. Concerns arose around data quality because AI-driven “credit washing” distorts borrower profiles.

Meanwhile, auto sales slowed in the first quarter, partly due to comparisons to the unusual tariff-driven surge in 2025. Higher-income buyers continue to support demand, while consumers shift to used vehicles or exit the market.

Funding markets remain stable, with only modest widening in auto ABS spreads and steady investor demand, though banks are becoming more cautious as private credit exposure grows. Still, leasing may provide an offset, with Credit Union Leasing of America projecting growth as lenders seek alternatives to long-term loans.

In this episode of “Weekly Wrap,” Auto Finance News Editor Amanda Harris, Deputy Editor Johnnie Martinez II, Senior Associate Editor Truth Headlam and Associate Editor Aidan Bush discuss top trends across macroeconomic dynamics, affordability, funding and powersports lending for the week ended April 3.

Auto Finance News will present multiple invaluable events for industry professionals in 2026, starting with the Auto Finance Summit East and the Auto Finance Capital Summit in May. To see event agendas and register, visit autofinance.live.