Auto Loan Delinquencies Soar

Auto loan delinquencies have reached historic highs in 2025, with subprime borrowers especially affected and overall rates surpassing those seen during the 2009 recession. The subprime delinquency rate (loans overdue by 60+ days) climbed to 6.65% in October, the highest level ever recorded by Fitch Ratings.​

Key Statistics

• Over 6.6% of subprime auto loans are delinquent by at least 60 days.​

• Car repossessions in 2025 are projected to hit 3 million, a figure not seen since the 2009 recession.​

• Auto loan delinquency rates vary significantly across states, ranging from around 3.2% in Alaska, Utah, Washington, and New Hampshire up to 9.8% in Mississippi.​

Main Reasons Behind the Surge

• Higher Vehicle Prices: The average price for a new vehicle exceeded $50,000 in 2025, sharply increasing monthly payments for borrowers, especially those with subprime credit.​

• Elevated Interest Rates: Prime borrowers see rates around 9%, but subprime rates run between 18-20%, making loans harder to manage.​

• Longer Loan Terms: As prices and borrowing costs rose, consumers took on longer loans, which increase the risk of negative equity and financial strain.​

• Inflation and Economic Uncertainty: Broader economic instability, inflation, and higher cost of living have squeezed household budgets, leading to rising defaults and delinquencies across nearly all income and credit tiers.​

• Subprime Borrowers Most Impacted: While prime delinquency rates remain low (0.37%), subprime delinquencies are accelerating, creating stress for lenders and borrowers alike.​

Broader Implications

• Lenders may react to prolonged high delinquencies by tightening borrowing standards, raising costs for all consumers, and making car ownership less accessible for vulnerable groups.​

• The surge in auto loan defaults is a signal of wider financial distress, and some experts worry about the risks this poses to consumer credit markets and economic stability.​

Auto loan delinquencies are now a key barometer of household financial health in the U.S., and their rise reflects broad-based stress within the economy.​