Car Loans Just Hit a 32-Year Delinquency Record

If you price a new car this month, the sticker price is merely an opening offer. On average, new cars ran $770 in monthly payments in the first quarter, according to the "State of the Automotive Finance Market" report from Experian. Used cars averaged $531 monthly. If you factor in full coverage insurance (which, according to Bankrate, now averages $2,697 per year, up about 12 percent since 2024), a typical new car purchaser may be looking at paying about $995 per month before the first tank of gas and oil change.

This isn't a car payment. This is a 2019 mortgage.

And for a growing number of buyers, paying for it has become impossible. Behind the monthly payment number, there is a record high that hasn't been seen since 1994, a wave of repossessions not observed since the Great Recession, and a probe in the Senate. Additionally, behind the figure is another set of opposing numbers from the New York Fed which suggests that the "crisis" isn't nationwide, but is instead concentrated within specific segments. Both are factually correct simultaneously, and the truth lies in the space between them.

The Statistics Lurking Beneath the Surface

Let's begin with the numbers that dominate news coverage. As of January 2026, according to Fitch Ratings, 6.9 percent of securitized subprime auto loans are at least 60 days overdue. This is the highest mark that Fitch has recorded in the 32 years of data collection, exceeding even the period of 2008-2009 and the pandemic.

Repossessions confirm the findings from the opposite end of the spectrum. Lenders repossessed approximately 1.73 million vehicles in 2024, the highest figure since 2009. Based on estimations by Cox Automotive, repossessions increased by 43 percent from 2022 to 2024. The volume is expected to remain high into early 2026 as lender closures and inflation continue to put pressure on consumers. The Senate's opening of a probe into the repossessions, led by Senator Elizabeth Warren in February, shows that politics are finally catching up with the statistics.

Losing the car is only half of the issue; the deficiency balance (the amount owed after the vehicle is sold at auction) follows the borrower, and the negative impact on their credit lasts seven years. In most of the country, without a car, an individual cannot make it to work. Among all forms of consumer debt, this one provides the quickest path from "missed payment" to "loss of employment."

Why a Car Payment Became a Mortgage Payment

There are three interconnected factors that have contributed to the situation:

• Prices remain high. New car prices have barely dropped and are nearing peak levels, and tariffs are indirectly increasing parts and repair costs, thereby increasing insurance premiums (up 12 percent since 2024).
• Interest rates remain elevated. Since the Fed has maintained its position and Treasury yields are high, subprime borrowers often agree to loans with rates in the mid-teens.
• As a result, buyers have turned to their only remaining option, which is to extend the loan term. Nearly a third of all new car loans are currently longer than six years, according to Experian.

This long loan term is the silent killer. With a seven-year loan on a depreciating asset like a car, most of the loan term is spent owing more than the car is worth. Data from Edmunds indicates that 30.9 percent of new car trade-ins in the first quarter had negative equity, which is the highest since early 2021. The average underwater trade-in is burdened by a $7,183 deficit which is usually rolled into the next car loan. For this group, a new-car payment is $932, not $770.

By rolling over negative equity two times, you are essentially paying interest on two vehicles you no longer own, something dealers will happily let you do.

The usual way out is not much better. For decades, used cars were the budget option. But the pandemic-related production slowdown of recent years has depleted today's used car inventory, keeping prices high while loan rates on used cars are now several percentage points above new cars. With a $531 monthly payment on a vehicle that is several years old, in addition to repair costs increased by the same tariffs that are driving up everything else, it's no longer the budget-friendly purchase it once was. Many households are faced with no affordable alternatives.

The Information Left Out of Headlines

Now let's consider the other set of numbers. According to the New York Fed's Q1 2026 Household Debt and Credit report, which examines all $1.69 trillion of outstanding auto loans, 7.72 percent of auto loan balances became delinquent during the quarter, a decrease from 7.99 percent a year ago. Serious delinquency remained flat. The Fed's researchers reported these numbers as positive for the auto market. The affordability index from Cox Automotive pointed in a similar direction, improving in March for a fifth consecutive month due to income growth and rising incentives before declining in April.

So, is it a record crisis or a stabilizing market? Both. The 32-year record high applies exclusively to subprime borrowers, who took out loans in 2022 and 2023 at peak prices and unfavorable rates. Prime borrowers, who account for the majority of the $1.69 trillion in auto debt, continue to make their payments on time. The average numbers look fine because the people making their payments on time outweigh the ones who are struggling to do so. If this sounds familiar, it is similar to the phenomenon we observed when examining why six-figure earners feel financially stressed and the $1.28 trillion credit card debt situation: financial difficulty that is invisible in the average but debilitating for a vulnerable group.

It also echoes the student loan crisis, where approximately 9 million borrowers are now either in default or approaching it. Although it is a different type of debt, it is affecting the same group of borrowers.

If You Are Looking to Purchase or Struggling with Your Auto Loan this Year

A few things can be learned from these statistics.

• Do not roll over negative equity. This is the primary reason borrowers end up in that $932-a-month group: Edmunds found that 90 percent of loans that extend old debt are 72 months or longer, and 43 percent extend to 84 months. Keep your current car longer, or purchase something less expensive than you can afford until your loan and car values balance out.
• Treat 72 months as the ceiling, not the default setting. The monthly payment may look more affordable, but the long-term financial consequences can be severe. If an 84-month loan is the only way the deal can go through, then the deal is not a good one.
• Get your car insurance quotes before you commit to a car. With an average annual premium of $2,697, the difference in insurance premiums between two car models could easily exceed the difference in price between them.
• If you are already behind on payments, contact your lender before they repossess your vehicle. Repossession is an expensive process for lenders, and loan modifications and deferrals are available far more readily than borrowers might assume. Once your car is repossessed, you lose your negotiating power.

The era of the inexpensive car did not end this quarter, it ended in approximately 2021. What has occurred since then is that the debt incurred to overcome this price increase is now due, and it is impacting those at the bottom of the credit ladder first. The averages will continue to appear favorable until they don't.