Industry Expertise | The New Auto Finance Outlook
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With the 2026 auto finance market defined less by any single disruption than by the continued reshaping of the industry in response to evolving demands, adaptability is increasingly a differentiator for lenders seeking to capitalize on change.
Ongoing affordability pressures, shifting ownership patterns, and the emerging picture of EV financing are all factors lenders are navigating today. Each of these is manageable in isolation, but together they reveal the accelerating rate of change in the industry and the need for flexibility in the operational and technical foundations that lenders rely on.
Financing models are changing. Rising vehicle prices and increasing total cost of ownership continue to intensify affordability pressures on customers in a challenging economic environment. As lenders seek to offer affordability levers to customers, established norms in the financial products and structures offered are being revisited.
Terms are stretching – and processes with them. With average monthly payments reaching new highs (as reported by Edmunds), customers remain price-sensitive. One clear sign of affordability strain is the increase in financing duration
Used-vehicle leasing moves from niche to strategy. New-vehicle leasing has long been an established financing option with EVs, overarching affordability concerns, and shifting sentiment about vehicle ownership all contributing to the growth in lease penetration from post-pandemic lows, as noted in recent figures from JD Power and GlobalData.
EVs and the residual value question. Residual value risk concerns with electric vehicles continue to play out. With hundreds of thousands of EVs coming off lease in 2026 (significantly more than prior years), early-vintage residual value assumptions are being challenged. The expiration of EV tax credits, a growing understanding of battery health and aging, and rapid technological change are all factors whose impact continues to unfold in a still uncertain environment for EV financing.
Building for change. Underlying all these shifts in the current auto market is a common challenge. As lenders look to change the way they operate, adapting and expanding their product offerings, they can often end up running multiple systems, or even find themselves restricted by the capabilities of legacy platforms.
The shape of the auto finance market will continue to shift. While this alone is not novel, the rate and extent of that change is ever-increasing. The question for lenders then becomes not about predicting the next trend, but whether their operational and technological systems will let them respond to it.
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September 29th, 2026
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