Auto Loan Market Projected to Exceed $2.8 Trillion
The global auto loan market is forecast to surpass $2.8 trillion by 2031, according to a Mordor Intelligence report. Market expansion is being driven by strong demand for passenger vehicles, which accounted for over 80% of financing demand in 2025. The growth is also supported by momentum in used-vehicle financing and the increased accessibility of digital lending platforms.
The U.S. auto loan market is a significant component of the global picture, with total outstanding debt reaching $1.655 trillion. The lending landscape is fragmented among banks, captive finance companies, and credit unions. Captives, like Ford Motor Credit and Toyota Financial Services, dominate new vehicle financing with a 57.08% market share, while banks lead in the used vehicle space. Rising vehicle prices have pushed many consumers toward the used car market, which now accounts for 58.20% of all auto loans in the U.S. The average loan amount reflects this split, with consumers borrowing an average of $42,332 for new vehicles compared to $27,128 for used ones. This has resulted in average monthly payments of $748 for new cars and $532 for used cars as of the third quarter of 2025. Borrowing costs have been driven up by Federal Reserve rate hikes that began in 2022. By September 2025, the average interest rate for a new car loan had climbed to 9.43%, while the average for a used car loan was even higher at 14.15%. To manage higher payments, borrowers are increasingly opting for longer loan terms, with many now extending beyond 6 years. This combination of higher prices and interest rates is straining household budgets, leading to a surge in delinquencies that has surpassed levels seen during the Great Recession. In the third quarter of 2025, 5.0% of all outstanding auto debt was 90 or more days late. The pressure is most acute in the subprime market, where delinquencies hit a record 6.6% in January 2025.
