Though new vehicle sales have been booming in recent months, especially in December 2024, car owners in the United States are also increasingly falling behind in their car payments, according to the latest data.
As reported by Bloomberg the rate of delinquency on auto loans and car payments in the U.S. is currently the highest it has been in more than 30 years, with data unavailable prior to 1994 when the figure was not calculated.
About 6.56 percent of “subprime” auto buyers with loans are 60 days or more behind on their car payments currently, as revealed by the research. Furthermore, 3 percent of auto loans in the country are in “serious delinquency” with payments more than 90 days overdue according to the Federal Reserve Bank of New York.
Delinquency rates in car payments approached current levels twice before during the 30-year span of the study, once in the late 1990s and again in 2020 when the COVID-19 epidemic and the resulting lockdowns and closures devastated the U.S. economy. However, early 2025 outdoes both of these periods.
Several factors appear to be combining to result in the current spike in lagging car payments in America. Seesaw movements in the stock market from President Donald Trump‘s use of tariffs to apply pressure to Canada and Mexico are one cause. The biggest factors, according to Mike Girard of Fitch Ratings, come from “the continued impact from higher inflation and interest rates.”
Girard sees further rough times ahead for auto buyers, remarking “the lower income level has been really affected, and we expect that to continue to be the case this year.” High prices and high loan rates, combined with a faltering economy and inflation, are causing repossessions to rise sharply.
Car payments are bigger than at any other time in U.S. history, with about a fifth of buyers paying $1,000 a month or more. Some analysts are advising purchase of a used car despite higher interest rates simply to avoid the high prices and payments of the current auto market.
Foreshadowing the current situation, loan terms were longer and interest rates higher in Q3 2024, with 84-month loans becoming more common than earlier in the year. Trade-ins with negative equity also reached an all-time high in 2024 at 24.2 percent, while negative equity of $10,000 or more on all car loans reached a level where 22 percent of buyers are now under water on their loans.
Comments
DUH!!! All these idiots paying $80, $90, $100k for a truck and suv at 7 and 8 year loans are sinking with $1200 to $1500 or higher vehicle payments per month. I have a 4 year old house that’s 6000 square feet and acre of land, and pay under 1800 per month. The past 4 years have shown that American people are very uneducated and have their priorities backwards. I’d rather drive a 2018 Denali with 60k miles on it and live in a brand new house that I have over $400k in equity, then drive a new $85k denali that will get me nothing back in 5 to 10 years. STOP BUYING. Put the car dealerships/manufacturers in hot seat for price gouging the past 4 years.
Is this a surprise to anyone? How long can you (as a nation) continue to buy over-sized SUV’s, trucks and expensive cars with loan payments over $1,200 on average? On top of that, even at $3.50 per gallon, most of these over-sized vehicles will cost the average driver between $190 and $250 per month just for gas. Add to that the ever increasing insurance costs (hey, everyone needs these over-powered engines and 4WD right?). All said and done, the average American is spending close to $2,000 per month just to drive a freeking vehicle. When will the madness end?
Gotta keep up with the Jone’s
The madness will end when 2008 repeats itself.
How many times do we need to relearn:
1. SAVE in the good times, don’t bury yourself in debt! And:
2. Never borrow what a bank says you can afford.
Also, wait until you guys realize how many mortgages are over 90 days delinquent and how much of your tax money was GIVEN to the banks for mortgage forbearance programs. And also how that is affecting the current housing market.
@John
I was working in Las Vegas and saw the housing market BOOM and then crash on its face in 2008. Every TV channel had people on there begging for assistance because they did 30 interest only payments and where 300k+ upside down on their homes. It’s looking like that now. Hate to say it but we almost need this to happen to get a complete reset. Idk if anyone can get us out of this.
I agree. We need more affordable single family houses for younger folks, they are struggling.
Love how the first “reason” is listed as the trump tariffs.
How can 60 day delinquent payment be blamed on the guy that hasn’t even been in office for 60 days, and tariffs that have only been in force against Canada and Mexico for a couple of weeks?
@Bob
Totally agree with you on this. The past 4 years,along with Covid, was outright stupid spending that lead to the highest inflation in a LONG time. He is trying to FIX what is obviously broken…(late car payments/house payments, high interest rates, insurance through the roof, fuel prices still high, groceries out of control, high vehicle prices, building homes half size of what I built mine for, but charging $100k more) It all needs reset, and if we collapse, oh well, I was SMART with my money and didn’t blow it on WANTS instead of NEEDS. I believe TRUMP will find a way to reset it but not have a total collapse. It will be a mild one.
We need a mild recession like a constipated man needs a bowel movement to get his colon force working properly again.
Yes. And sub prime loans are not to people in the stock market. If anything it certainly isn’t anything to do with trump being in office. I love how gma is hinting that car loans are more than 90 days delinquent and it’s trumps fault. Ah, no.
I like how the first “reason” listed is tariffs. If those are just now being put in place, how does that affect someone who’s already 60+ days past due? Do better GMA.
well we will see this summer as trumps tariffs get more people laid off . sells will fall and people will lose their wheels
More people were missing their payments and losing their cars the last 4 years. Biden laid off plenty. Ask a pipeline worker or the guys building the wall he cancelled. Tariffs have been around for decades. Nice try though.
As trumpy-trump said in his speech in front of the Congress, it is only the beginning. Well, for once, he was right for people missing their car payment. When does a president change is required, according to 20th amendment??? 1-Death 2-Sickness-3-Destitution. Well, if the republicains would wake up, trumpy-trump is already eligible with #2 and #3
Go live in Canada and your woke nonsense your current leader seems to be doing great so you have nothing to complain about you should be a self sustainable country anyway!