Even as higher vehicle prices, insurance premiums, and borrowing costs continue to squeeze household budgets, Spokane-area lenders say auto loan activity is picking up this year as customers refinance existing loans, stretch payment terms, and hunt for more affordable vehicles.

A growing amount of data suggests that owning a vehicle has become more expensive in the last 10 years. The average cost of a new vehicle hit $49,000 in March, compared to $34,000 a decade ago, according to Kelley Blue Book, an automotive research and vehicle valuation company. The average monthly payment is about $750, with 1 in 5 buyers making monthly payments of $1,000 or more, according to Car Edge, an online platform that helps people buy, lease, and own cars. Depending on the vehicle make and location, insurance premiums can cost about $500 a month.

Additionally, interest rates over the last six years have surged from historic lows during the pandemic — with the Federal Reserve cutting the federal funds rate to nearly 0% — to a target range between 5.25% and 5.50% in 2022. In 2025, the Federal Reserve made three quarter-point cuts to interest rates, lowering the target rate from 3.50% to 3.75%. 

Despite those challenges and the evolving interest-rate landscape, some lenders say customers are adapting to the market. 

Among three regional financial institutions — Washington Trust Bank, Canopy Credit Union, and Numerica Credit Union — all have reported increased loan activity in 2026. Overall, while affordability remains a challenge for consumers, lenders say customers are adjusting their purchasing habits rather than postponing vehicle ownership altogether.

“The need for reliable transportation hasn’t changed,” says Dominic DeCaro, vice president, director of credit resource center and small business banking at Washington Trust Bank.

Auto loan volumes started slow in 2026 compared to previous years, but are picking up in the second quarter due to promotional offers at the bank, DeCaro says. Customers are being more deliberate by making choices with a focus on affordability and monthly payments. For some, that means choosing lower-priced vehicles, such as older vehicles ranging from three to five years old, or selecting compact and fuel-efficient vehicles, such as sedans rather than trucks and SUVs, he says. 

Some customers also are choosing longer loan terms and delaying purchases when possible, while borrowers with strong credit are moving forward with vehicle purchases despite higher-than-desired rates. 

As of June, Washington Trust Bank's typical auto loan rates are about 5.5%, with some promotional rates in new markets starting at 3.99%, he says.

Although the cost of borrowing remains a key factor for consumers, lenders are paying equal attention to payment stability. Industrywide, there's been an uptick in delinquencies this year compared to prior years. However, delinquencies aren't rising sharply, and the situation is manageable, he says.

“It’s stable; we’re monitoring it,” says DeCaro. 

While delinquency rates remain a focus for lenders, Canopy Credit Union has seen some improvement in loan performance. Thirty-day delinquencies declined to 2.7% in May from 3.7% a year earlier, while 60-day delinquencies remained relatively stable over the same period, says Guy Ottersen, vice president of lending and member experience at Canopy Credit Union.  

At the same time, the credit union has experienced significant growth in auto lending activity, with loan production up 50% this year after being cut roughly in half during the previous two years. That growth is being driven by new vehicle loans and an uptick in auto refinance activity, he says. 

Currently, Canopy Credit Union has consumer loan rates starting at 4.49% for new and used vehicles. Customers seeking vehicle refinances are often motivated by lower rates, lower monthly payments, and longer term limits to help offset insurance costs, fuel costs, and other expenses, he says.

“We’ve actually seen auto loan rates decrease over this last year, which has actually created this refinance bubble,” Ottersen says. 

For new auto loans, the credit union is experiencing more direct financing through partnerships with dealerships, he says. A combination of factors is driving the recent increase in loan activity, including increased inventory, the return of cash rebates, improved manufacturer incentives, and amplified dealership promotions.

“Our branches are keeping busy with walk-in traffic as well,” Ottersen says. “And those are folks coming in to refinance their vehicles. We’ve got two main channels, and they’ve just been explosive over the last six months.”

While car sales are climbing, qualifying for a loan has become more complex, Ottersen says, noting that worsening debt-to-income ratios — driven by high credit card usage — remain a major barrier for many applicants.

These financial deterrents are not unique to Canopy’s membership; Numerica Credit Union reports a similar environment where, despite persistent affordability concerns, loan activity remains strong because personal vehicles remain a daily necessity for work and life, says Jeremy Wheeler, vice president, dealer services at Numerica. 

Auto loan applications at Numerica are up 8% from last year, says Wheeler, adding that buying trends have shifted toward vehicles that better fit household budgets.

“A lot of people are payment buyers,” Wheeler says, noting that many shoppers begin the process with a target monthly payment rather than a specific brand and model in mind.  

Another challenge facing borrowers is negative equity, in which customers owe more on a vehicle than what it's worth. This can make it difficult for customers to trade in their vehicle or qualify for new financing. 

To overcome barriers, more customers are getting educated about financing options, says Numerica Financial Engagement Manager Jon Maroni. Customers are increasingly refinancing loans when improved credit scores allow them to qualify for lower rates.  

Looking ahead, lenders say they expect loan activity to remain steady through the year, supported by improved vehicle inventories, competitive financing, promotional offers, and continued demand from customers who still rely on a personal vehicle for daily work and life.