Auto lenders face challenges in affordability, with rising payments and loan amounts despite interest rate cuts.

Auto lenders are facing the same affordability dilemma as dealers, with higher prices and economic uncertainty affecting sales. According to TransUnion, average monthly payments and the average amount financed have increased for new and used vehicle loans, despite interest-rate cuts. The average used-vehicle monthly payment is now almost the same as the average new-vehicle monthly payment pre-pandemic. Delinquencies and potential losses for subprime loans are on the rise, affecting lenders and investors in the asset-backed securities market.