Capital One says US auto prices and 'forever loans' are no threat

Capital One Auto Finance, the consumer-credit giant's car-loan unit, told investors it remains comfortable with the US used-vehicle market despite record sticker prices and the rapid spread of 84-month financing terms now nicknamed 'forever loans'. The lender said loss rates have stayed within plan even as monthly payments climb to fresh highs.

Chief executive Sanjiv Yajnik said strong wholesale used-car values, tighter underwriting since 2023 and a borrower mix tilted toward prime customers continue to cushion the portfolio. Capital One has been redirecting volume away from long-term subprime paper, where delinquencies remain elevated, and leaning on dealer relationships to retain higher-quality originations through a difficult cycle.

The comments come as the average new-vehicle price hovers near 49,000 dollars and roughly one in five US auto loans stretches beyond six years. Regulators and consumer groups warn that long terms can leave buyers underwater for most of the loan, but lenders insist borrower behavior has held even as the Federal Reserve keeps rates elevated.