Experian’s latest quarterly State of the Automotive Finance Market report finds U.S. car buyers are borrowing more to finance their purchases but securing notably lower interest rates.

The average loan amount for a financed new vehicle purchase grew to $43,610 in the second quarter — a 4.1% increase from Q2 2025 — with an average monthly payment of $765. Used car buyers borrowed an average of $27,852, a 3.2% increase, paying an average of $542 per month. However, the average interest rate on a new vehicle loan fell from 6.8% to 6.4% and the average rate for used declined from 11.6% to 11.2%.

Analysts note that hybrids accounted for nearly 17% of all new vehicle financing in Q2, up from 13% in the year-ago quarter. Hybrids also boasted the lowest average monthly loan ($646) and lease ($566) payment of any new vehicle type.

“With the EV tax credit expiring last year, hybrids seemingly have become a more attractive option for consumers, particularly for those looking to save some money at the pump,” writes Melinda Zabritski, Experian’s head of automotive financial insights, in a release. “But we’re also seeing hybrids offer greater financial flexibility, likely driven in part by manufacturer incentives that are making hybrids more cost-effective than in previous years.”

Banks (27.2%) remain the No. 1 source of all auto originations, ahead of captive finance companies (26.3%), credit unions (20.1%) and noncaptive finance companies (16.2%). Captives remain dominant in the new vehicle segment, accounting for more than half (52.2%) of all loans.

Read the full report at Experian