The 60-day delinquency rate on subprime auto loans in the United States has climbed to 6.9 percent, according to new data from Fitch Ratings and Equifax. The figure exceeds the 2008 financial crisis peak of 5 percent by a substantial margin. It also surpasses the 1996 high by 0.9 percentage points. Fitch has tracked subprime auto-loan asset-backed securities since the early 1990s. This is the highest reading in that entire history.
Serious delinquency rates for auto loans have more than doubled since 2021. The acceleration is concentrated almost entirely among borrowers with credit scores below 670, the threshold lenders use to classify subprime risk. Prime borrowers with scores above that line have a delinquency rate of roughly 0.39 percent, according to Fitch data from earlier this year. The contrast is stark: subprime delinquencies are running at more than 17 times the prime rate.
The Numbers Behind the Pressure
Total U.S. auto debt has reached $1.67 trillion, the highest on record, according to Federal Reserve Bank of New York data. That figure represents a $312 billion increase over the past five years. Subprime financing makes up approximately 14 percent of all outstanding auto loans, or roughly $234 billion.
Monthly payments have hit records as well. The average new car payment reached $770 in the first quarter of 2026, per Experian data. Used car payments averaged $531. One in five new car buyers now commits to monthly payments of $1,000 or more. That share has grown sharply from 17 percent just a year earlier.
Average loan terms have stretched to nearly 70 months for new vehicles, with nonprime borrowers often extending to 75 months or longer. Loans of 84 months or more now account for almost 23 percent of all financed new-car purchases, more than double the share from a decade ago.
Repossessions Reach Post-Crisis Highs
The strain shows up in repossession data too. Cox Automotive reports that roughly 1.73 million vehicles were seized in 2024, up 43 percent from 2022 and the highest total since 2009. The default rate reached 3.13 percent last year, its highest level since 2011. For context, the default rate hit 3.18 percent in 2007, then spiked to 4.12 percent in 2009 at the depth of the Great Recession.
Some analysts caution that today's delinquency picture differs from 2008. A Philadelphia Federal Reserve analysis published in April notes that while the stock of severely delinquent accounts is rising, the flow of new delinquencies entering that stage has been relatively stable since late 2022. The increase may partly reflect changes in loan servicing and forbearance practices rather than a sudden wave of new defaults. Still, the researchers acknowledge that the dynamics warrant close monitoring, particularly if macroeconomic conditions deteriorate.
The Negative Equity Trap
One factor compounding the problem is negative equity. Edmunds data shows that 30.9 percent of trade-ins toward new-vehicle purchases carried negative equity in the first quarter of 2026, the highest share for any quarter since early 2021. The average amount owed on those underwater trade-ins reached $7,183, also a quarterly record. When buyers roll that debt into their next loan, monthly payments balloon: Edmunds found that buyers carrying negative equity paid an average of $944 per month in the second quarter of 2026, compared to $777 for the industry average.
The pattern creates a feedback loop. Higher prices force longer loan terms. Longer terms slow equity accumulation. Slower equity accumulation increases the odds of being underwater when it comes time to trade in. Being underwater forces buyers to roll debt forward, making their next loan more expensive and more likely to become delinquent. Rinse and repeat.
Why This Matters Beyond Car Lots
Auto loan performance has historically served as a leading indicator of broader consumer stress. When households start missing car payments, it often signals that budgets are stretched across multiple fronts. The Federal Reserve tracks these metrics precisely because car payments tend to get prioritized: people need their vehicles to get to work, which means when car loans go bad, other debts are usually in worse shape.
Subprime borrowers hold only about 17 percent of all active auto loan accounts, according to the Philadelphia Fed, but they account for nearly two-thirds of all delinquent loans. The stress is concentrated, not broadly distributed. That concentration may limit systemic risk compared to 2008, when mortgage exposure was far more widespread. But it also means the pain is falling disproportionately on households already living at the margins.
The policy implications are contested. Some industry forecasters, including TransUnion, project that delinquency rates will remain roughly flat through the end of 2026. Others point to broader affordability pressures and argue that the worst may not be over. What is clear is that the American car market has become a place where millions of buyers are taking on loans they can barely service, for vehicles that depreciate faster than they can pay them off, in an environment where walking away means losing their primary means of getting to work.
Investor appetite for subprime auto ABS has remained steady, suggesting confidence that tighter underwriting standards will prevent a broader fallout. Whether that confidence is warranted will depend on how the labor market and broader economy perform in the months ahead. For now, the data says one thing: a record share of subprime borrowers are in trouble, and the trajectory has not reversed.
