- More than 6% of subprime auto borrowers are at least 60 days past due on their loans.
- Approximately 3% of car borrowers are 90 days or more past due with their repayments.
- A slowing economy, inflation, sky-high new car prices, and hefty loans are to blame.
Affording a car loan is becoming a growing challenge for many Americans, with missed payments reaching levels not seen in over three decades. According to data from Fitch Ratings, car owners are falling behind on their monthly payments at a higher rate than at any point in the past 30 years—a troubling sign of mounting financial strain.
The data reveals that 6.56% of all subprime auto borrowers were at least 60 days past due on their loans in January. Additionally, the proportion of car borrowers that have payments 90 days or more past due has jumped to 3%. Figures for February have yet to be released, but it’s quite common for delinquencies to increase in January and February before falling in March and April.
Read: Nearly 20% Of Car Buyers Took On $1,000+ Monthly Payments In Q4
These troubling figures are only for those who have credit scores of 640 and below. Those with better credit ratings are far more likely to be up-to-date with payments. Just 0.39% of prime auto borrowers were at least 60 days past due in January.
There are several factors at play here. Economic growth started to slow towards the end of Joe Biden’s presidency and this trend has continued through the early stages of the Trump administration. Inflation also continues to hurt the hip pocket of many consumers, and new car prices are near record highs, forcing many shoppers to take out hefty loans that many simply can’t afford.
“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 the final quarter of 2024, the average amount financed for new vehicle purchases in the US jumped to $42,113. Of those who are locked in a new-car loan, 18.98% are grappling with payments of $1,000 or more. In addition, the average loan term in Q4 2024 reached 68.8 months and the average monthly payment across the board has increased to $754.
