In response to the end of the federal EV tax incentive, EV financing surges with a marked rise in both loans and leasing for electric vehicles, according to recent data from Experian’s automotive finance report.

The end of the tax credit at the close of September triggered an unmistakable wave of buyer activity, marking one of the most decisive quarters for EV financing in recent years. Both lenders and market analysts are now evaluating what this shift means for the industry, especially as manufacturers accelerate EV production and retail inventories climb.

This surge in financing activity—paired with changing buyer behaviors—signals a significant turning point for the U.S. auto market as it moves toward a more electrified future.

A Notable Increase: EV Financing Crosses New Thresholds

One of the most striking findings from Experian’s latest report is the continued increase in EV participation in the financing ecosystem. In Q3 2025, electric vehicles accounted for 11.36% of all new-vehicle financing, rising from 10.14% in the same period last year. While a single percentage point increase may appear moderate at first glance, it represents a substantial number of vehicles, especially in a market as large as the U.S. auto sector.

This upward trajectory demonstrates sustained consumer confidence in EV technology—even at a time when prices remain relatively high and federal incentives have come to an end. It also underscores the shifting preferences of buyers who now view EVs not as niche alternatives, but as mainstream mobility solutions.

Leasing Leads the Charge

Perhaps the most significant change documented in Experian’s report is the dramatic uptick in EV leasing. In Q3:

• More than 56% of consumers chose to lease an EV, compared to about 46% in the previous year.

• EVs now account for one in every four new leases (25%), a sharp rise from under 18% just 12 months earlier.

This is a pivotal development. Leasing has traditionally played a role in helping consumers access vehicles with lower upfront cost, but the scale of the shift toward leasing EVs is unprecedented. It reflects a broader effort among cost-conscious consumers to continue embracing electric mobility even after the expiration of price-offsetting incentives.

The Leaders in EV Leasing

Unsurprisingly, Tesla’s Model Y and Model 3 remain among the most commonly leased EVs in the country. Their strong brand value, high demand, and stable resale outlook make them top choices for both leasing companies and consumers seeking predictability. Other emerging EV brands are also beginning to gain traction, but Tesla still dominates this segment.

Changing Financing Structures: Higher Loan Amounts and Longer Terms

Experian’s report also highlights major changes in how consumers are structuring their auto financing, both for EVs and for traditional internal-combustion vehicles.

Rising Loan Amounts for New Vehicles

In Q3 2025, the average new-vehicle loan amount rose to $42,332, up approximately $1,378 from the previous year. This increase reflects:

• Higher vehicle MSRPs across nearly all segments

• Increased demand for mid- and high-tier trims

• Expanding EV adoption, as EVs tend to have higher sticker prices

Alongside rising loan amounts, the average monthly payment for new vehicles climbed from $735 to $748. Even a modest monthly increase can significantly impact household budgeting, especially during a period of inflation and economic uncertainty.

Used-Vehicle Loans Also Trend Upward

The used-vehicle market saw similar increases, though less dramatic:

• The average used-vehicle loan amount rose to $27,128

• Average monthly payments also increased, though at a slower pace than the new-vehicle segment

This trend suggests that affordability challenges are pushing some consumers away from new vehicles—but rising used-car prices are limiting relief.

Loan Terms Are Stretching Further

One of the most notable trends in automotive finance is the increasing length of loan terms:

• Nearly 30% of new-vehicle loans now extend between 73 and 84 months

• A rising number exceed 85 months, crossing into what the industry considers ultra-long-term loans

These extended terms help consumers offset high monthly payments, making newer and more expensive vehicles—including EVs—more attainable. However, long-term debt can also lock buyers into negative equity cycles, potentially complicating future trade-ins or refinancing efforts.

Why the Surge in EV Financing Is Happening Now

The surge in EV financing activity is closely tied to the expiration of the federal EV tax credit—a change that prompted a rush among buyers hoping to secure deals before price increases took effect.

1. Deadline Pressure Drove Consumer Action

When the federal tax credit ended in late September, many consumers accelerated their purchase timelines. This “last chance” effect created:

• A rise in loan applications

• Increased dealership foot traffic

• A spike in lease signings

• Greater demand in both new and used EV markets

The surge aligned with industry forecasts, which had predicted a significant pull-forward effect in EV demand leading up to the policy shift.

2. Leasing Became a Financial Workaround

With higher EV sticker prices and no federal incentive, leasing provided several attractive advantages:

• Lower upfront costs

• Lower monthly payments compared with financing

• Opportunity to upgrade to newer EV technology every few years

• Reduced long-term ownership risk in a rapidly evolving market

This is especially relevant as EV battery technology, charging speeds, and software capabilities continue to improve. Leasing gives consumers flexibility without committing to long-term ownership during a period of rapid tech evolution.

3. Growing Infrastructure, Better Range, and Consumer Confidence

Even without incentives, EV adoption continues to benefit from expanding charging infrastructure, longer driving ranges, and improved affordability across entry-level EV models. These factors helped fuel the financing surge, making the transition away from the tax credit less disruptive than initially feared.

Implications for the Auto Market and U.S. Consumers

The trends identified in Experian’s report carry important implications for manufacturers, lenders, dealers, and consumers alike.

1. Leasing Emerges as a Gateway to EV Adoption

With EVs now representing 25% of all new leases, leasing has become a dominant pathway into EV ownership. This trend is likely to continue over the next several quarters as consumers:

• Adjust to higher EV prices

• Seek predictable cost structures

• Try EV technology without long-term commitment

This shift also benefits automakers, many of which can scale EV sales more quickly through structured lease programs.

2. Longer-Term Loans Are Becoming the Norm

While longer loan terms make vehicles more attainable, they also:

• Increase total interest paid

• Extend the duration of negative equity

• Potentially push buyers into longer trade-in cycles

For EV buyers in particular, long loan terms can complicate resale timing as technology evolves rapidly, affecting used-EV values.

3. Used-EV Market Set to Expand Quickly

The boom in EV leasing today will translate into:

• A larger pool of used EVs over the next two to four years

• Increased availability for price-sensitive buyers

• Potential downward pressure on used-EV pricing

As more off-lease EVs enter the market, this could help stimulate broader adoption among consumers who may not be ready to purchase new EVs.

4. Financing Flexibility Becomes a Critical Factor

With incentives gone, financing models now play a pivotal role in EV adoption. Dealers and lenders are increasingly offering:

• Competitive interest rates

• Specialized EV financing programs

• Bundled charging or maintenance packages

• Promotional lease deals

This shift places greater importance on lender competition and consumer education in navigating new EV financing landscapes.

Conclusion: A Turning Point for the U.S. EV Market

Experian’s Q3 2025 automotive finance report makes one thing clear: the end of the federal EV tax credit has not slowed EV momentum. Instead, it has triggered a reshaping of the market, with financing and leasing emerging as critical enablers of continued adoption.

EV financing surged past 11%, leasing activity reached historic highs, and consumers adapted by embracing longer loan terms and alternative ownership models. As the EV market matures and infrastructure continues to improve, these financing trends will play a central role in shaping the future of electric mobility in the U.S.

The next few years will reveal how consumers balance affordability, technology, and long-term financial commitments—factors that will define the trajectory of EV adoption in a post-incentive era.

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