Executive Summary:
Auto loan delinquencies in the U.S. have reached alarming levels, particularly among subprime borrowers. As of January 2025, 6.5% of subprime auto loans are at least 60 days overdue, marking the highest delinquency rate since 1994. In contrast, only 0.39% of borrowers with higher credit scores are behind on payments.
Economic pressures such as high vehicle prices, rising interest rates, and overall inflation have made it difficult for many Americans—especially lower and middle-income households—to keep up with car payments. Monthly auto loan payments exceeding $1,000 have become more common, forcing consumers to prioritize essential expenses like rent and groceries over their loans.
Lenders are increasingly facing higher-than-expected delinquency rates, leading to a surge in loan charge-offs. While repossessions are typically delayed until borrowers are more than 90 days behind, they have risen significantly, increasing by 23% in mid-2024 compared to the previous year.
With the cost of living continuing to climb, financial experts warn that more consumers may fall behind, deepening the strain on both households and lenders in the coming months.
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