Auto Loan Delinquencies Hit Highest Level on Record as More Consumers Struggle

Auto loan delinquencies have reached record levels, with subprime borrowers struggling to keep up with payments. Rising car prices, inflation, and high interest rates have made it increasingly difficult for many Americans to stay afloat financially.

Key Facts:

In January, 6.56% of subprime auto borrowers were at least 60 days late on payments, the highest level since tracking began in 1994 (Fitch Ratings).
Auto loan delinquencies across all borrowers rose to 3% in Q4 2024, the highest since 2010 (Federal Reserve Bank of New York).
Higher inflation and elevated borrowing costs have contributed to a surge in vehicle repossessions.
Experts say lower-income Americans are hit hardest, with many struggling to recover from ongoing financial pressures.
While tax refunds may provide some short-term relief, the broader financial outlook remains uncertain.

The Rest of The Story:

The percentage of borrowers at least 60 days late on their car payments has hit a record high, adding to growing concerns about consumer financial health.

Fitch Ratings reports that subprime borrowers—those with credit scores of 640 or below—are the hardest hit, while prime borrowers are managing better, with only 0.39% falling behind.

Experts point to a combination of factors behind the spike in delinquencies.

Inflation remains persistent, driving up everyday costs and leaving less room in budgets for loan payments.

Rising interest rates have also made auto financing more expensive, particularly for those with lower credit scores.

Meanwhile, consumer confidence has declined, and household debt has surged to record levels, signaling broader economic distress.

Auto Loan Delinquency Rate hits highest level in 14 years 🚨 pic.twitter.com/1di50PnOc3

— Barchart (@Barchart) February 12, 2025

Commentary:

The struggles many Americans are facing with their car payments are just another consequence of the economic policies of the last four years.

Under Biden, inflation soared, borrowing costs climbed, and wages failed to keep up with the rising cost of living.

For lower-income families, this meant having to choose between paying for essentials and keeping up with car loans.

With Trump back in office, there’s reason for optimism.

His policies have historically focused on lowering taxes, reducing regulations, and stimulating economic growth.

If past trends hold, we can expect policies that encourage job creation and wage increases, helping families regain financial stability.

That said, fixing the economy won’t happen overnight.

Inflationary pressures remain, and interest rates are still high.

It will take time to unwind the damage done by excessive government spending and misguided monetary policies.

However, with a shift in economic leadership, there’s hope that Americans will soon see relief.

As the market stabilizes and pro-growth policies take effect, families struggling today may find it easier to stay on top of their bills.

The Bottom Line:

Americans are falling behind on car payments at the highest rate in decades, with inflation and high interest rates making it harder to stay afloat.

Subprime borrowers are feeling the brunt of the crisis, but economic policy changes under Trump could offer hope for a turnaround.

While challenges remain, a return to pro-growth policies may help ease financial strain and restore stability.