Americans Are Falling Behind On Their Car Loans

In January 2025, the Federal Reserve Bank of New York reported 6.56% of subprime auto borrowers—those with credit scores below 640—were at least 60 days past due on their loans. Meanwhile, 3% of all borrowers were 90 days or more past due. By contrast, just 0.39% of prime auto borrowers were 60+ days late on payments in the same period.

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The surge in late payments is tied to a combination of economic factors: slowing economic growth since the U.S. presidential election and inflation are both significant burdens on shoppers. Consumer debt is surging while consumer confidence is plunging; coupled with Donald Trump's trade war machinations, it's the perfect storm.

On the supply side, new car prices are out of control and sit near record highs, while older, affordable models are discontinued or replaced. This is forcing many buyers into larger loans for new cars that they are struggling to repay and is also creating tremendous pressure on the used car market.

“The lower income level has been really affected, and we expect that to continue to be the case this year,” Mike Girard from Fitch Ratings told Bloomberg. “There’s still the continued impact from higher inflation and interest rates.”

In Q4 2024, the average amount financed for new vehicle purchases in the U.S. jumped to $42,113. Nearly 19% of car buyers took on monthly payments exceeding $1,000, and the average loan term stretched to 68.8 months. Across all borrowers, the average monthly car payment climbed to $754.

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