Auto Loan Delinquencies Hit 15-Year High as 1.73 Million Vehicles Repossessed

Delinquency Rates Exceed Great Recession Levels

Auto loan delinquencies have reached their highest point in 15 years, with the overall 60-plus day delinquency rate hitting 1.38% in the first quarter of 2025, according to Bankrate analysis. This surpasses the 1.33% peak recorded during the Great Recession in 2009.

The serious delinquency rate for loans 90 or more days past due reached 5.2% in the fourth quarter of 2025, coming within 0.06 percentage points of the all-time high set during the financial crisis recovery, American Default reported.

Subprime Borrowers Hit Record Highs

Subprime auto loan delinquencies have reached unprecedented levels. Prodigal Tech reported that 6.6% of subprime auto loans were delinquent in January 2025, the highest rate since tracking began in 1994.

The crisis extends beyond traditional high-risk borrowers. Even prime borrowers are falling behind at increasing rates, with delinquencies rising from 0.35% in January 2024 to 0.39% in January 2025.

Repossession Activity Surges

Vehicle repossessions reached 1.73 million in 2024, the highest number since 2009, according to Cox Automotive estimates. While this remains below the 2009 peak, the volume signals widespread financial strain among American households.

"Inflation remains a clear omnipresent issue for consumers, whether it's vying to pay their automotive loan, their insurance, their gas bill or their food bill," Jeremy Robb, acting chief economist at Cox Automotive, told Bankrate.

High Vehicle Prices Drive Payment Stress

The average price of a new car has reached nearly $50,000, while used vehicles average $25,565, according to Kelley Blue Book data. These elevated prices translate into monthly payments that strain household budgets.

Near-prime, subprime, and deep subprime borrowers pay an average of more than $500 monthly on used car loans and more than $700 on new car loans. Edmunds reported that 17.4% of new-vehicle buyers in 2024 left dealerships with monthly payments exceeding $1,000.

Interest Rate Disparities Amplify Risk

Borrowers with poor credit face dramatically higher costs. Those with deep subprime credit scores pay 21.55% interest on used car loans, compared to 7.41% for borrowers with excellent credit — a threefold difference that makes default far more likely on similar loan amounts.

Negative Equity Traps Borrowers

Many borrowers find themselves underwater on their vehicle loans. Currently, 28% of trade-ins carry negative equity, with owners owing an average of $6,905 more than their vehicle's value. This situation limits options when borrowers face financial difficulties, as they cannot easily sell or refinance.

Pandemic-Era Lending Comes Due

Much of the current distress stems from loans originated during the early pandemic years, when credit was both cheaper and easier to obtain. Government relief programs and reduced spending temporarily inflated credit scores, allowing some borrowers to qualify for loans they might not have otherwise received.

"Those loans are already on the books — the ones from the loose [credit] era," industry analyst Ivan Drury told Bankrate. "What we're seeing now is those loans starting to make up more of the majority of loans out there, and that's what's led to that steep rise in delinquencies."

National Debt Load Grows

National auto loan debt has reached $1.66 trillion, surpassing student loan totals and trailing only mortgage debt as the country's largest consumer liability. The Consumer Federation of America warned in a September 2025 report that auto finance is "at a breaking point."

Industry Adjusts Standards

Lenders are responding by tightening credit standards. GM Financial reported that approximately 12% of its 2025 loans went to customers with FICO scores below 620, reflecting more cautious underwriting as delinquencies climb.

Despite rising delinquencies, investor demand for securities backed by subprime auto loans has remained steady, suggesting confidence that stricter lending standards will prevent broader financial fallout.

Geographic and Demographic Patterns

The rise in delinquencies affects borrowers across all age groups, though younger borrowers in their 20s remain more than twice as likely as seniors to fall behind on payments. Industry data shows delinquency trend lines rising across every generation.

The financial cushion that helped many families stay afloat during the pandemic has largely vanished. Savings rates have fallen, wages have not kept pace with inflation, and the job market has cooled, leaving consumers with less flexibility in their budgets.