Auto loan delinquency rates have surged to the highest levels since the early 1990s. Analysts attribute this to a combination of soaring new car prices exceeding $50,000, high installment interest rates, and an unstable labor market. Vehicle repossessions have also reached their highest levels since the 2008 global financial crisis, signaling serious cracks in the financial health of U.S. households.

According to credit rating agency Fitch on October 22, the delinquency rate for auto loan payments 60+ days past due among subprime (low-credit) borrowers with credit scores below 670 has doubled since 2021, reaching 6.43%. This level is more severe than during the three previous recessions: COVID-19 pandemic, Great Depression, and dot-com bubble burst. In particular, subprime borrowers’ auto loan delinquency rate hit its second-highest level since the early 1990s, following January this year.

Meanwhile, Americans with high credit scores are experiencing no significant difficulties with auto loan payments. Although delinquency rates among prime borrowers have also risen significantly, they remain below 0.5%, still very low. Vehicle repossession or default rates are also skyrocketing. According to Cox Automotive, nearly 10% of subprime auto loan borrowers had vehicles repossessed or scheduled for repossession as of September. While this is down from a year ago, it remains above the long-term average

CNN reported, “Subprime borrowers often have no choice but to default,” noting, “They owe far more than their vehicle’s value, so they can’t sell it. Many are already delinquent on mortgages or rent, credit cards, and student loans.” Jonathan Smoke, Cox Automotive’s chief economist, emphasized, “Subprime borrowers are backed into a financial corner with no room to breathe.”As car prices have skyrocketed, monthly payments have ballooned accordingly. According to Experian, over half of new car leases and more than three-quarters of new car loans signed in Q2 had monthly payments exceeding $500, while 46% of used car loans were above $500. Over 17% of new car loans had payments of $1,000 or more.

Vehicle repair costs have also surged. The Bureau of Labor Statistics reported that auto repair costs rose 15% year-over-year in August—the highest in nearly two years. Between July and August, repair costs jumped 5%, the largest monthly increase on record. Auto insurance premiums are also rising sharply. Although August marked the lowest annual increase in three years, premiums still rose nearly 5%—far exceeding overall inflation.

Experts view the rising auto loan delinquency rates among low-income groups as a major warning signal. Cars are essential for Americans for commuting, supporting families, and buying groceries. Economists warn that if corporate layoffs become more frequent due to shrinking profits from tariff policies under the Trump administration, auto loan delinquencies could surge even further.

CNN noted, “The wide gap in delinquency rates between prime and subprime borrowers once again highlights the K-shaped economy,” adding, “Many Americans investing in stocks and owning increasingly valuable homes are doing well and spending aggressively, while many others—especially low-income consumers—are struggling to stay afloat.”