By Jim Henry
For the last two consecutive quarters, there’s been a big increase in auto loan and lease originations in the risk tier just above subprime, compared to a year ago.
Specifically, this surge has been happening in the credit score range from 620 to 659, according the latest data from the New York Federal Reserve. And so far it’s had only a minor effect on the market as a whole.
“The credit quality of newly originated auto loans worsened slightly,” from a high level a year ago, summed the New York Fed Household Debt and Credit Report for the second quarter of 2026, which was published Aug. 11.
The median credit score at origination for all risk tiers combined was 716 in the second quarter of 2026, down from 724 in the same quarter a year ago, the report said. The statistics are for auto loans and leases, and for new and used vehicles, all combined.
The New York Fed considers subprime a single category, defined as credit scores below 620, and it’s common in the industry to define the cutoff between subprime and prime at 620.
Credit: Murphy Automotive Partners
Still, it’s a trend worth keeping an eye on, according to analyst and consultant John Murphy, founder and managing partner of Murphy Automotive Partners.
"The high-end consumer, the high-end mix, has been seen as very resilient — and arguably, at or near-peak. Everything is a potential issue and a potential opportunity,” explained Murphy, in an Aug. 13 interview with WardsAuto about the New York Fed results.
“So, without taking on extreme risk, maybe expanding credit categories is a way to support volume. There might be a safe way to do so,” without increasing subprime loans per se, he said.