As Consumers Return to the Auto Market in 2025, Lenders Face Heightened Challenges in Determining Risk

TransUnion releases new auto market analysis during AFSA Vehicle Finance Conference

Over the coming year, many consumers considering a car loan or lease may re-enter the market with much more complicated credit pictures than they did a few years ago. The findings come from a new analysis released by the company TransUnion (NYSE: TRU) in conjunction with the AFSA Vehicle Finance Conference 2025 in New Orleans.

TransUnion’s recently released Consumer Pulse Study found that among consumers who said they plan to apply for a new loan or refinance an existing loan by October 2025, nearly one in four intend to purchase a new loan or car lease during that time frame. The same survey found that 31% of consumers believed their finances were better than expected at the time of the October 2024 survey compared to earlier this year. As such, it is critically important that lenders thoroughly evaluate the creditworthiness of potential borrowers and maintain an awareness of the credit portfolios of existing borrowers.

“As the macro economy stabilizes and we begin to see a return to more typical economic patterns, consumers may return to a more manageable financial position, which may lead many to re-engage in the automotive market,” said Jason Laky, executive vice president. and head of financial services at TransUnion. “However, given the unusual nature of the consumer economy during the pandemic era and in the years ahead, it will be imperative that lenders use all the tools at their disposal to ensure that the consumers they lend to are appropriately at risk and in a position to continue making payments.”

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Millennials may be among the most active shoppers. TransUnion’s latest Consumer Pulse revealed that this demographic is the most likely to buy a car. About 31% of millennials said they were very or somewhat likely to do so between October 2024 and January 2025. That’s 10 percentage points more than the second-highest group, Gen Z.

In the same Q4 2024 survey, only about four in 10 millennials said their finances were better than expected at the start of 2024. The above paradigm does not apply exclusively to millennials and underscores the need for lenders to scrutinize consumers when assessing risk and using all the tools and resources they have access to in doing so.

“In TransUnion’s recently released 2025 Consumer Loan Forecast, we noted that auto delinquencies are expected to decline in 2025,” said Satyan Merchant, senior vice president and head of TransUnion’s auto and mortgage business. “However, lenders play a key role in realizing this decline. One way is to ensure that potential and existing borrowers are in a financial position to avoid these torts. Lenders can use tools and resources that facilitate a comprehensive understanding of the market and its consumers and make informed, data-driven decisions.”

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When lenders consider extending auto loans to customers in 2025, they must consider a wide range of critical factors such as:

• Optimizing their underwriting and pricing strategies
• Loan-to-value criteria, their own and other lenders
• Market share and industry patterns within their target segment
• Managing dealer relationships and developing strategies to expand their networks
• Monitoring portfolio health and forecasting losses

One tool that can help lenders isolate these factors is AutoCreditInsight^TMpowered by TransUnion in partnership with S&P Global Mobility. AutoCreditInsight provides depersonalized credit data – such as risk levels and original loan terms – in conjunction with comprehensive, accurate and timely vehicle registration. Through an interactive user interface, lenders can create custom visualizations and run detailed statistical queries, reports and analysis to make more informed decisions faster.

In addition, the new AutoCreditInsight Vintage Analysis solution, an extension of the existing AutoCreditInsight suite, combines vehicle, loan and delinquency data to enable lenders to evaluate overall loan market performance trends and benchmark individual portfolio performance at the industry and peer group level.

“While it is essential that lenders are prepared for the potential increase in car purchases, it is equally important that consumers work to ensure their credit profile is as high as possible to ensure a positive car buying experience,” the dealer continued. “That means being fully aware of what’s on their credit reports and making timely payments on existing credit accounts.”