September 2026 Auto Market Report: Cheap Money Is Back, But Only If You Ask

Two things happened in the auto market this summer that look contradictory until you put them next to each other. Lenders originated more money than in any quarter on record. And the share of borrowers falling seriously behind climbed to near a two-decade high. Both are true, and both are the same story: credit got easier, and easier credit finds people who cannot quite afford the payment.

Here is the September read, with the numbers behind it.

Lending got loose

The New York Fed counted $211 billion in auto loan originations in the second quarter, the largest quarterly figure in its data. That number is not adjusted for inflation, and car prices have climbed a lot, so treat it as a volume signal rather than a shock statistic.

The composition is the interesting part. Subprime share of new vehicle financing rose from 5.61 percent to 6.88 percent year over year, and subprime used financing went from 19.36 percent to 20.60 percent, per Experian. Lenders approved more lower-score borrowers, and they wrote longer paper to do it: new loans running past six years grew from 31 percent to roughly 36 percent in a single year.

Predictably, stress followed. The share of auto debt entering serious delinquency, meaning 90 or more days past due, rose to 3.00 percent from 2.93 percent a year earlier, and balances sitting 90+ days late reached their second-highest level since 2003.

Prices stopped climbing, mostly

New vehicle average transaction price hit $49,855 in July, the highest of 2026, but still below the all-time peak of $50,612 set in December 2025. Kelley Blue Book has not published the August figure yet.

The used side actually cooled. The Manheim Used Vehicle Value Index fell to 207.4 in mid-August, down 1.2 percent from July and essentially flat against a year earlier, after running hot through the first half of the year. Wholesale days supply sat at 27.7.

If you were waiting for used values to keep climbing before selling, that tailwind has flattened. Run the Sell or Keep Verdict against your real payoff.

The refinance window is genuinely open

This is the number worth acting on. Experian put the average monthly saving from refinancing at $83 in Q2 2026, up from $64 a year earlier. The average refinance rate was 7.97 percent against an average original rate of 10.40 percent.

That gap exists because a lot of people financed at the dealer during a high-rate stretch and never looked at it again. Where you refinance matters: credit unions delivered the largest average payment reduction at $102 a month, ahead of banks at $65 and finance companies at $38.

$83 a month is about $1,000 a year for roughly fifteen minutes of paperwork. If your loan is more than a year old and your credit has not gotten worse, run the Refinance Verdict and find out where you stand.

The payment picture

Source: Experian, Q2 2026. The new payment ticked down about $5 from Q1 while used rose about $11.

One quiet shift worth noting: hybrids now carry the cheapest average new payment at $646, below electric at $692 and below plain gasoline at $721. The cheapest monthly payment on the lot is increasingly the hybrid, which inverts the conventional wisdom from a few years ago. If you are weighing that choice, our Lease vs Buy Verdict runs the total cost rather than the payment.

What we would actually do this month

If you are holding a loan older than a year: check refinancing. The average saver is getting $83 a month and credit unions are paying the best. This is the single highest-return fifteen minutes in the current market.

If you are shopping new: the price ceiling has held below December's peak for eight months. There is no urgency premium. Look hard at hybrids, where the payment math has quietly become the best on the lot.

If you are thinking about selling: used values went flat. Waiting is no longer paying you.

If you are being offered a seven-year loan: that is the market telling you the car is too expensive, not that the payment is affordable. More than 3 percent of new loans now run past seven years, and the delinquency data shows where that ends.

Bottom line

Money is available and rates have eased off their worst, but lenders are reaching further down the credit spectrum to keep volume up, and the delinquency numbers say some of those borrowers should not have been reached. The market is friendlier than a year ago if you arrive with your own financing and hostile if you let the finance office write the terms.

Check where rates sit on our Market Pulse tracker before you sign anything.

Sources

New York Fed Household Debt and Credit Report, Q2 2026. Experian State of the Automotive Finance Market, Q2 2026. Kelley Blue Book / Cox Automotive average transaction price, July 2026. Manheim Used Vehicle Value Index, mid-August 2026. Bankrate auto loan rate survey, September 2026.