The dollar value of auto loan originations for borrowers with credit scores between 620 and 659 jumped 55.4% in the second quarter of 2026 compared to a year earlier. That follows a 53.6% spike in the first quarter. The numbers come from the New York Federal Reserve’s latest Household Debt and Credit Report, and they describe a lending market that is quietly loosening its belt.
This credit tier sits just above the subprime cutoff of 620. It is the riskiest slice of what the industry still calls “prime.” And it went from 9.4% of all auto loan and lease originations a year ago to 13% in Q2 2026.
Two quarters of growth this steep do not happen by accident.
The super-prime crowd, borrowers with scores above 760, still dominates at 40.8% of all originations. That share actually ticked up from 40% a year ago, and it towers over the 31.6% super-prime share recorded in Q2 2019, before the pandemic reshuffled consumer balance sheets. The top of the market is not shrinking.
But the middle is hollowing out. The median credit score at origination across all tiers fell to 716, down from 724 a year earlier. That eight-point drop in 12 months reflects money flowing toward both ends of the spectrum while the center softens.
John Murphy, founder of Murphy Automotive Partners, sees lenders and OEMs reaching for volume now that the high-end buyer pool may be tapped out. “The high-end consumer, the high-end mix, has been seen as very resilient, and arguably, at or near-peak,” Murphy told WardsAuto. Expanding into lower credit tiers without crossing the subprime line is the play, a calculated bet rather than a reckless one.
Brian Gordon, president of Dave Cantin Group, an automotive retail M&A advisory firm, pointed to a structural shift in who is writing these loans. Captive finance companies owned by large dealer groups like Lithia, AutoNation, and CarMax have “doubled their business” over the past decade, he said. These retailer-owned lenders are embedded in the transaction, closer to the metal, and willing to take risks a traditional bank would wave off.
Ally Financial, one of the largest standalone auto lenders, has publicly acknowledged pushing into loans just above and below the 620 threshold. When a lender that size moves, it moves the numbers.
The delinquency picture, for now, looks manageable. TransUnion’s Q2 Credit Industry Insights Report showed serious delinquencies, defined as 60 or more days overdue, at 1.51% of all auto loans and leases. That is barely above the 1.49% recorded a year ago.
Satyan Merchant, TransUnion’s senior vice president for automotive and mortgage, cautioned against reading too much into surface-level delinquency data. When more loans go to riskier borrowers, delinquency rates naturally drift upward. That is math, not a crisis.
The question is whether the math stays benign.
Lenders are not flooding the subprime pool. They are wading into the shallow end of prime, where risk is elevated but theoretically contained. The 620-to-659 borrower is someone who might have been a 680 two years ago, knocked down a tier by inflation, by a missed payment, by the slow grind of an economy that rewards the top and squeezes everyone else.
The K-shaped economy thesis keeps showing up in the data. Super-prime is expanding. Near-prime is expanding. The distance between them is growing.
If the economy stays on its feet, this lending push looks like a smart grab for share. If something breaks, a recession, a tariff shock, a spike in unemployment, the 620-to-659 tier is exactly where the cracks will appear first. Lenders know this. They are betting the floor holds.
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