On the Dash:
- Hybrids hit 16.80% of new vehicle financing in Q2, up from 12.99% last year
- Hybrid loans carry the lowest average monthly payment at $646, beating EVs and gas vehicles
- Refinancing saved consumers $83 a month on average as rates declined
According to Experian‘s State of the Automotive Finance Market Report, hybrid vehicles accounted for 16.80% of new vehicle financing in the second quarter of 2026, up from 12.99% a year earlier, while EV market share fell over the same period, dropping to 8.15% from 9.21%.
The report highlights that the shift is driven by ongoing gas price pressures on household budgets. Hybrids had the lowest average monthly payment among new loans at $646, followed by EVs at $692, and gasoline vehicles at $721. For new leases, hybrids again had the lowest payments, averaging $566, compared to $602 for gas vehicles and $641 for EVs.
Melinda Zabritski, Experian’s head of Automotive Financial Insights, pointed to the expiration of the federal EV tax credit as a factor pushing buyers toward hybrids, stating, “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,” Zabritski said in a company statement.
The trend also aligns with sales data reported earlier this summer, as NADA’s June Market Beat report showed hybrid sales increased to 19.4% in the first half of 2026 and EV sales fell 25.1% over the same span. Meanwhile, JD Power’s July forecast projected hybrids would account for 15.9% of retail sales that month, up 2.5 percentage points from a year earlier, as the end of the federal tax credit continued to reshape buyer behavior.
Notably, broader market data showed rising costs for new-vehicle buyers overall. Since the average loan amount for a new vehicle rose $1,715 year-over-year to $43,610, and the average monthly payment climbed $16 to $765, interest rates moved in the opposite direction, with the average new-vehicle rate dropping to 6.35% from 6.79% a year earlier.
Moreover, used vehicle financing followed a similar pattern. The average loan amount rose to $27,852, up $875 from last year, while the average monthly payment increased to $542 from $532, yet the average used-vehicle interest rate fell to 11.19% from 11.57%.
Refinancing activity also picked up as rates declined, since the average refinance rate in the second quarter was 7.97%, compared with a 10.40% average original rate, saving consumers $83 a month. Notably, credit unions delivered the biggest savings for refinancing customers, at $102 a month, followed by banks at $65 and finance companies at $38.
New vehicle leasing edged down to 23.75% of the market from 24.04% a year earlier, while loans grew to 59.57% from 57.45%. Banks held the largest share of the total auto finance market at 27.15%, followed by captive lenders at 26.26% and credit unions at 20.38%.
