More Americans are struggling to keep up with their car payments. An October report from Vantage Score shows that auto delinquencies are up 50% since 2010. Add to that, Fitch Ratings data shows subprime auto-loan delinquency rates (more than 60 days delinquent) are at their highest ever - indicating growing financial struggles for lower-income Americans.
According to news reports, Fitch Ratings data shows that the percentage of subprime borrowers who are at least 60 days late on their car loans has doubled to 6.43% since 2021. Subprime borrowers are defined as consumers with credit scores below 670. J.D. Power data indicates that in September, the percentage of buyers with sub 650 FICO scores trended towards 14.0%, up 3.1 percentage points from last year and the highest level for September since 2016 at 14.9%.
According to Edmunds, the average monthly car payment in the U.S. is more than $750, with the share of buyers committing to monthly payments of $1,000 or more accounted for 19.1% of all financed new-car transactions in the third quarter.
High vehicle prices remain a major part of the problem. Even as new-car inventories recover, affordability hasn’t followed. Used vehicles, once considered a refuge for buyers priced out of new cars, are no longer much of a bargain either. During the pandemic, easy credit and stimulus checks pushed many buyers into vehicles with longer loan terms and higher monthly payments. Now, with that temporary cushion gone and inflation still nibbling at paychecks, many borrowers are reaching a breaking point.
Repossession activity is reflecting the strain. Cox Automotive estimates about 1.73 million vehicles were repossessed in 2024—the highest total since 2009. While most borrowers are still managing to make their payments, the growing number of defaults at the lower end of the credit spectrum suggests cracks are forming.
Lenders have started tightening standards, particularly for subprime borrowers. Some are limiting loans to those with credit scores above 620 or 650, hoping to contain risk. Yet at the same time, automakers need to keep vehicles moving off lots, especially as more expensive trucks and SUVs dominate production. That tension—between protecting against default and maintaining sales—makes this period especially tricky for the industry.
Interestingly, investor demand for subprime auto-loan-backed securities remains solid. Analysts believe stricter underwriting and lower default correlations will prevent a broader financial crisis like the one that rattled the market in 2008. Still, the rising delinquency data is a warning sign that shouldn’t be ignored.
For dealerships and finance offices, the implications are clear. Affordability, not aspiration, is becoming the central concern for buyers. Longer terms, extended warranties, and payment deferrals might look attractive on paper, but they can leave buyers vulnerable down the line. Dealers who help customers understand the full cost of ownership—including insurance, maintenance, and depreciation—may avoid bigger headaches later when repossessions or charge-offs start climbing.
There’s also a ripple effect to consider. When borrowers default, those cars eventually flow back into the used market, adding inventory that can pressure resale values. That may help future buyers find deals, but it can also erode the trade-in values that current owners depend on to buy their next car.
In short, while the auto finance market isn’t in crisis, it’s showing signs of stress at the margins—and those margins matter. The typical American car buyer is paying more for longer and carrying more risk with each new loan. With interest rates still high and wages not keeping pace, delinquency rates may continue to rise into next year unless affordability improves.
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