As consumers battle inflation and high gas prices, auto loan terms are being stretched farther and farther, even those under $25,000, which now make up more than a third of loan originations.

LendingTree analyzed about 154,000 credit reports of its users with active auto loan accounts from Oct. 1 to Dec. 31, 2025, finding that nearly two out of five borrowers entered the new and used markets with modest loan amounts.

“It’s a clear sign that affordability is driving today’s car-buying decisions,” said LendingTree Chief Consumer Finance Analyst Matt Schulz.

“Consumers are increasingly prioritizing lower monthly payments and manageable loan sizes over bigger vehicles or premium features. It also reflects how many buyers are turning to used cars and smaller models and making other compromises to make the numbers work in a high-rate, high-price environment.”

The company also found that the youngest generation of car buyers was more likely to finance less expensive vehicles, more than half of generation Z consumers borrowing less than $25,000. The cohort also had the lowest median credit score at 649 and the lowest median monthly payment at $493.

“Gen Zers likely don’t have as easy access to credit as other generations do,” Schulz says. “They’re in the process of building their careers and their credit scores, so they’re a bigger risk for lenders.”

But smaller loan sizes don’t necessarily equate to lower monthly payments, LendingTree pointed out. It found that subprime borrowers with loans under $25,000 had a median monthly payment of $417, or $36 more than near-prime borrowers. And median repayment terms were largely the same for all credit score tiers at 72 and 71 months except for the super-prime tier, which was at 60 months.