Record Number of Americans Behind on Auto Loan Payments

A growing number of Americans are falling behind on their auto loan payments, signaling financial strain among lower-income vehicle owners as car prices remain elevated.

Delinquency rates for subprime auto loans – those issued to borrowers with credit scores below 650 – have reached record levels, with more than 6% of these loans at least 60 days overdue this year, according to Fitch Ratings. This represents a significant increase, particularly as the percentage of new car buyers with lower credit scores rose to nearly 14% in September, the highest level since 2016. An estimated 1.73 million vehicles were repossessed in 2024, the highest total since the 2009 recession, according to data from Cox Automotive.

The average monthly car payment now exceeds $750, and almost 20% of loans and leases surpass $1,000, creating affordability challenges for many buyers. Automakers have responded by loosening credit standards in an effort to move inventory, with companies like Ford offering lower interest rates to buyers with lower credit scores on F-150 pickups. A Ford spokesperson stated that only 3% to 4% of the company’s loan portfolio is backed by higher-risk customers. General Motors’ credit arm reported that approximately 12% of its loans this year have gone to customers with FICO scores below 620.

These rising delinquency rates could have broader implications for the financial sector, potentially impacting auto lenders and the overall economy. For context, understanding subprime lending and its risks is crucial in assessing this situation. The current trend echoes concerns from the 2008 financial crisis, when similar lending practices contributed to widespread economic instability, as detailed by the Federal Reserve History.

Officials are monitoring the situation closely, and automakers are evaluating their lending practices to mitigate potential risks.