Navigating Auto Loan Challenges: Undervalued Stocks Poised for 2026 Lending Trends

The auto loan landscape in 2025 has become a ticking time bomb for lenders and borrowers alike. Delinquency rates have surged to levels not seen since the Great Recession, with 1.38% of loans 60+ days past due in Q1 2025. Subprime borrowers are particularly vulnerable, with 6.6% of their loans delinquent in January 2025-a record since 1994. These trends are driven by long-term, high-interest loans from the pandemic era, soaring vehicle prices, and the expiration of government financial support. Meanwhile, consumer behavior is shifting rapidly: 84-month loans now account for 22% of new car originations, while used car sales are projected to hit 38 million in 2025. Electric vehicle (EV) adoption is also accelerating, with used EVs retaining value better than traditional vehicles. For investors, these dynamics create both risks and opportunities. Below, we analyze undervalued auto finance and fintech stocks positioned to thrive in 2026.

The Perfect Storm: Auto Loan Delinquencies and Consumer Behavior

The fragility of the auto credit environment is evident across all credit tiers. Early-stage delinquencies (30–59 days) rose to 1.13% in September 2025, reflecting widespread financial stress. Borrowers are stretching loan terms to manage monthly payments, with the average new car loan now lasting 69.1 months. While this lowers short-term cash flow pressure, it increases lifetime interest costs and negative equity risks. For lenders, the challenge lies in balancing risk management with accessibility.

Consumer preferences are also evolving. Used car purchases, which accounted for 65% of financing in 2025, are becoming the norm as affordability concerns dominate. Meanwhile, EVs are gaining traction, supported by government incentives and improved charging infrastructure. Lease-to-buy programs are also rising in popularity, offering flexibility for budget-conscious buyers. These shifts are reshaping the auto finance sector, favoring companies that adapt to longer terms, used car demand, and EV-specific financing.

Undervalued Auto Finance and Fintech Stocks for 2026

SoFi Technologies (SOFI): Digital Lending's Disruptor

SoFi has emerged as a key player in the fintech space, leveraging its digital-first model to attract younger, tech-savvy borrowers. In Q3 2025, the company reported record net revenue of $961.6 million, a 38% year-over-year increase, driven by its expanding loan and banking services. While its price-to-earnings (PE) ratio of 53.6x exceeds the industry average of 10.0x, SoFi's growth in membership ( 12.6 million as of Q3 2025) and focus on subprime lending innovation position it to benefit from 2026 trends. The company is also exploring AI-driven credit scoring to better assess nonprime borrowers, a critical advantage in a market where subprime delinquencies are rampant.

General Motors (GM): Pioneering Affordable EVs and Software

GM's strategic pivot to affordable EVs and hybrid models is a masterstroke in a market where EV retail sales face headwinds. The company is introducing smaller, lower-cost EVs to counter declining demand post-2025 tax credit expirations. Its software ecosystem, including Super Cruise and OnStar, also generates recurring revenue streams. With 38% of U.S. auto sales expected to be used in 2026, GM's focus on hybrid and internal combustion engine vehicles ensures it remains relevant to budget-conscious buyers. Additionally, its expansion in China and upcoming product launches reinforce its domestic market position.

Strattec Security (STRT): Securing the Future of Auto Finance

STRT's transition to electro-mechanical vehicle access systems aligns with the rise of EVs and digital finance. In Q4 2025, the company adjusted its product offerings to capitalize on lower auto financing rates and increased used car demand. Its focus on subprime lending solutions is particularly timely, as lenders seek tools to manage affordability challenges. By refining financing programs for regional and demographic variations, STRT is well-positioned to support dealers and consumers in a fragmented 2026 market as retail auto sales are projected to rise.

Risks and Opportunities in 2026

While these stocks offer compelling upside, challenges persist. Auto financing rates remain near-year lows, but consumer caution persists despite improved sentiment. Regulatory shifts on emissions and interest rates could further complicate the landscape. However, companies like SoFi, GM, and STRT are leveraging AI, digital ecosystems, and flexible financing to mitigate these risks. For instance, AI-powered credit scoring is enabling lenders to assess subprime borrowers more accurately, while EV financing programs are expanding access to sustainable vehicles.

Conclusion

The auto finance sector in 2026 is at a crossroads. Rising delinquencies and shifting consumer behavior demand innovation, and the companies that adapt will thrive. SoFi's digital lending expertise, GM's pivot to affordable EVs, and STRT's focus on subprime solutions represent undervalued opportunities in a market poised for transformation. As the industry navigates affordability challenges and technological disruption, these stocks offer a balanced mix of growth and resilience.