Auto credit stress hits data
Auto loan delinquencies are at a 30‑year high of roughly 7%, pointing to widespread repayment stress and the potential for large repossession volumes. Higher new‑vehicle prices — up about 33% since 2020 — have pushed average payments near $760 a month and increased total U.S. auto debt to roughly $1.66 trillion, squeezing manufacturer finance arms and eroding profitability through longer incentives and extended terms. (x.com) (x.com) (x.com)
More Americans are missing car payments even though the job market has not cracked the way it did in 2008. A Federal Reserve Bank of Philadelphia report says the share of auto loans at least 60 days past due hit 1.68% in the third quarter of 2025, the highest since 2008, and subprime borrowers were running near 6%, the highest level in more than 20 years of that dataset. (philadelphiafed.org) The pile of debt behind those missed payments is huge. The Federal Reserve Bank of New York said auto loan balances rose to $1.67 trillion at the end of 2025, with $181 billion in new auto loans added to credit reports in just the fourth quarter. (newyorkfed.org) The pressure starts with the sticker price. Kelley Blue Book said the average transaction price for a new vehicle was $49,353 in February 2026, while the average manufacturer’s suggested retail price stayed above $50,000 for the 11th straight month at $51,440. (coxautoinc.com) That is not just “cars got expensive” in a vague way. The Consumer Price Index for new vehicles rose from about 134.4 in early 2020 to 178.841 in February 2026, which is a roughly 33.1% jump in six years. (fred.stlouisfed.org) When the vehicle costs more, the loan gets bigger. Experian said the average new-car loan in the fourth quarter of 2025 was $43,582 at a 6.37% interest rate, and the average monthly payment climbed to $767 from $746 a year earlier. (experian.com) The Federal Reserve wrote in September 2024 that bigger loan amounts, more than higher interest rates alone, explain most of the rise in delinquency. Its researchers found the recent increase in missed payments was concentrated in loans originated since 2022, after car prices surged from mid-2020 to mid-2023. (federalreserve.gov) Lenders and dealers have been stretching the loan like pulling taffy to make the monthly number look survivable. Cox Automotive said 28.8% of auto loans in March 2026 had terms longer than 72 months, after February hit an all-time high of 29.3% in its dataset. (coxautoinc.com) That trick lowers the monthly bill, but it keeps borrowers underwater for longer. Cox Automotive said 59.2% of borrowers in March 2026 had negative equity, meaning they owed more than the car was worth, a record high for the third straight month. (coxautoinc.com) Risk is also getting pushed back into the system instead of cleared out of it. Cox Automotive said the share of loans going to subprime borrowers rose to 19.5% in March 2026, the highest level in its dataset since March 2020, even as the average contract rate climbed to 11.7%. (coxautoinc.com) The Philadelphia Federal Reserve says that helps explain why headlines can look worse than the flow of brand-new distress alone. Its April 2026 report found the stock of severe delinquencies is rising even while the flow of loans newly entering severe delinquency is fairly stable, which suggests troubled loans are staying unresolved for longer. (philadelphiafed.org) That leaves carmakers, captive finance arms, banks, and used-car markets staring at the same problem from different angles. If payments stay near today’s levels and more borrowers stay underwater longer, the industry can keep moving metal only by offering more incentives, longer terms, or looser credit, and each one cuts into profit somewhere else. (coxautoinc.com)
