Subprime auto delinquencies rising
Industry commentary flagged mounting 2026 pressures on auto lenders—rising inflation, shifting EV demand and regulatory changes—and noted delinquency rates on auto loans are climbing to multi‑year highs, especially among subprime borrowers. That trend increases credit risk for originators who lean on volume rather than tighter underwriting. (x.com) (x.com)
More U.S. auto borrowers are falling behind on car payments, and the missed payments are concentrated in subprime loans made to people with lower credit scores. (federalreserve.gov) The Federal Reserve said in a September 26, 2024 note that almost all of the rise in auto delinquencies came from near-prime and subprime borrowers, with riskier borrowers’ delinquency rates at or above Great Recession levels by the end of 2023. The same note said the increase was mainly concentrated in loans originated since 2022. (federalreserve.gov) The Philadelphia Federal Reserve reported in April 2026 that the seasonally adjusted share of auto loans at least 60 days past due reached 1.68% in the third quarter of 2025, the highest level since 2008. Subprime borrowers, defined there as people with credit scores below 620 at origination, held 17% of active auto loan accounts but accounted for nearly two-thirds of delinquent loans. (philadelphiafed.org) Fitch Ratings said on March 11, 2026 that subprime 60-day-plus delinquencies in U.S. auto asset-backed securities reached 6.74% in the second half of 2025, up from 6.15% a year earlier. Fitch said weaker 2022 and 2023 loan vintages were a main reason and said it expects prime and subprime performance to deteriorate further in 2026. (fitchratings.com) Auto lenders are still making more loans to riskier borrowers even as those borrowers show more stress. Experian said subprime borrowers accounted for 15.31% of total vehicle financing in the fourth quarter of 2025, up from 14.54% a year earlier and the segment’s largest share in a fourth quarter since 2021. (experian.com) Cox Automotive said in a February 16, 2026 market summary that subprime auto originations were up 12% year over year and the subprime share climbed to 15.7%. The same report said median credit scores for new auto loans fell to 716 from 724, pointing to broader lending into lower credit tiers. (coxautoinc.com) Higher monthly payments are one reason more borrowers are getting stuck. The Federal Reserve said borrowers taking out new auto loans in 2023 faced larger monthly payments than borrowers with similar credit profiles before the pandemic because vehicle prices and interest rates had both risen. (federalreserve.gov) TransUnion’s third-quarter 2025 Credit Industry Insights Report showed the overall 60-day-plus auto delinquency rate at 3.52%, up slightly from 3.50% a year earlier, while its measured subprime delinquency rate fell to 11.4% from 11.9%. That gap with Federal Reserve Bank and Fitch measures reflects different datasets and definitions, but all three sources show stress remains concentrated in lower-credit borrowers. (newsroom.transunion.com) Regulators are also tightening scrutiny around how cars and financing are sold. The Federal Trade Commission said on March 13, 2026 that it warned 97 dealership groups that advertised prices must include mandatory fees, adding compliance pressure for dealers and finance companies that depend on high-volume originations. (ftc.gov) The immediate question for 2026 is whether lenders keep chasing growth as weaker 2022 and 2023 loans keep seasoning into delinquency. Fitch said losses have risen less sharply than delinquencies because some borrowers are cycling in and out of late status, but it still expects weaker performance this year. (fitchratings.com)
