Americans Are Falling Behind On Car Payments Like It’s 1992 All Over Again

  • Subprime borrowers behind on car payments hit the highest level on record.
  • Fitch data shows 6.65 percent of subprime loans are over 60 days overdue.
  • Prime borrowers remain stable, highlighting the ongoing cost-of-living strain.

Buying a new car can be exciting, but figuring out how to pay for it? Less so. And for a growing number of Americans, it’s becoming a serious problem. Recent figures show that the percentage of subprime borrowers who are at least 60 days behind on their car payments hit a new record in October.

A Negative Record Since The Early 1990s

Not just a post-pandemic peak, or even a post-2008 high, but the worst since Fitch Ratings began tracking this data in the early 1990s. The share of 60-day defaults reached 6.65 percent in October, rising from 6.50 percent the previous month and 6.23 percent in October 2024.

Related: Americans Trading In Cars Owe More Than Ever And It’s Only Getting Worse

We’re only talking about subprime borrowers here, drivers with less than stellar credit histories who are forced to accept higher interest rates to get credit for their car, truck or SUV, despite their usually lower incomes meaning they’re the section of society who can least afford to pay more.

Auto Loan 60+ Delinquency Index
Americans Are Falling Behind On Car Payments Like It’s 1992 All Over Again
Fitch

The default rate for prime borrowers – those with good credit histories – has remained steady at 0.37 percent, Reuters reports.

Also: Detroit 3 CEOs And Tesla Exec To Face Congress Over Soaring Car Prices

The high subprime default rate, attributed to a combination of expensive vehicle payments and a general cost-of-living squeeze, hasn’t just cost people their cars, it could cost some their jobs. Two US subprime lenders, Tricolor and PrimaLend, filed for bankruptcy in September and October respectively.

Is That A Warning For The Economy?

The loss of those two lenders means it’s harder for subprime borrowers to access credit, but of more concern is what the auto loan situation says about the state of the entire US economy.

No one wants to miss a car payment and risk having it repossessed, but if a family hasn’t got enough money to cover every bill, the car loan is usually an early casualty, ensuring there’s (hopefully) enough cash left to pay for food and rent.

Also: Americans Crushed By Auto Loans As Defaults And Repossessions Surge

In September, we reported that Americans now owe a scary $1.66 trillion in auto loans, and that the Consumer Federation of America (CFA) thinks the problems in the auto finance space point to much bigger problems in the wider economy that as yet aren’t quite so visible.

Still, not everyone agrees on the implications. Analysts at Cox Automotive, for instance, say they see “no signs of a domino effect poised to rock the auto market or the economy”.

Americans Are Falling Behind On Car Payments Like It’s 1992 All Over Again

Sources: Fitch, Reuters, Cox Automotive


The Auto World

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