Late car payments hit record levels
Americans are falling behind on auto finance loan payments amid Sky’s high car costs and economic pressures, such as rising jobs, put strain on household budgets.
A record share of the lenders below have payments on car payments, according to new data from Fitch Ratings for a series going back to the ’00s. (The credit rating agency defines “Delinquent” as 60 days late or more; lenders below are those with credit scores of 640 or lower.)
Fitch’s index shows that US auto yields reached 6.65% in October – the highest streak in more than 30 years. A year ago, that percentage was 6.23%.
A separate report from the New York Fed also shows that auto loan lenders are struggling to make payments. Auto Loans Loan data shows the percentage of Auto Balance at least 90 days aggressive was 5.02% in the third quarter. That’s a rate not seen since 2020.
The recent bankruptcy of SubPrime Auto Lender Tricolor Holdings – and the bankruptcy of the original auto parts company
“My antenna goes up when things like that happen,” he said on a recent call with analysts. “I probably have to say this, but when you see one cockroach, there are probably more.”
Data from the New York Efded shows that the percentage of auto loans that turn into a serious test (defined as 90-plus days Delinquent) was 2.99% in the third quarter – a 15-year high.
“Maybe some people are overestimated because they bought cars at a time of high prices that they couldn’t afford,” said New York Fedy on the Call Press researcher.
Why auto delincoencies are increasing
A Kelley Blue Book report released Wednesday pegged new car costs at $49,766 in October.
But the lenders below tend to buy in the used market. According to the study, less than 6% of new auto loans were extended to subprime lenders in the second quarter. Loans used, the share was more than 22%.
With the exception of auto loans, the overall consumer credit picture is grim, according to the New York Fed.
“Household Debt Ratios are growing at a moderate pace, with rates of moderate to severe severity,” Donghoon Lee, an economic research consultant who worked on the report, said in a press release last week.
While credit conditions are tightening for subprime loan lenders, auto lenders continue to offer financial incentives for people with high credit scores. If you’ll soon be in the market for a car, improving your credit can be key to finding a car you can afford.
More from money:
Best Auto Reconnaissance Companies of 2025
Why America’s Rich Millions Don’t Look ‘Rich’
Credit card rewards: Experts say the clock is changing
