Writer: Lucy Lazarony
Editor: Lillian Guevara-Castro
Reviewer: Adam West
Key Takeaways
- The 60-day delinquency rate on subprime auto loans reached a new record of 6.9%, according to Fitch Ratings ABS Index and Equifax.
- For a subprime consumer, an auto loan delinquency means a drop in credit score, and the delinquency will stay on credit reports for seven years.
- For lenders, an auto loan delinquency may mean beginning the repossession process, writing off the delinquent loan as a charge-off, and selling the car at auction.
More subprime auto loan customers are slipping behind on their auto loan payments, with more people than ever falling 60 days late on their loans.
According to Fitch Ratings ABS Index and Equifax, the 60-day delinquency rate on subprime auto loans has reached a record high of 6.9%. This 6.9% delinquency rate is greater than the 5% peak recorded during the 2008 financial crisis, Newsweek reports.
A general economic malaise started impacting subprime auto borrowers in 2022, according to a report by S&P Global Rating.
What was troubling borrowers? They struggled to meet high monthly auto loan payments, deal with rising costs of inflation, meet housing obligations, pay other debt, and handle unemployment or underemployment troubles.
Impact of an Auto Loan Delinquency on Consumers
It’s a stressful time for subprime consumers who are 60 days or more late on their auto payments. If they don’t catch up on their payments, they may lose their car. And if their car is the way they travel to work, that could have a ripple effect on their finances.
Having an auto loan delinquency will hurt a borrower’s credit score and they will have a negative notation on their credit report for seven years. Applying for new credit will be more expensive for these consumers, and they may be turned down because of their sinking credit rating.
Still as stressful as it can be, the best move is to be upfront with a lender if you find yourself in this situation. Let your lender know when you can realistically make a payment. If you are struggling with payments because of a recent unemployment, be honest about that situation as well.
Impact of an Auto Loan Delinquency on Lenders
Not a lot of good comes from an auto loan delinquency for lenders. Once a consumer falls behind on payments and becomes delinquent on an auto loan, lenders report the delinquency to the credit reporting agencies.
They may start the process of repossessing the car, charge off the loan as a loss, and maybe sell the car at auction to try to recoup some of the car’s outstanding balance.
Long-term Impact of an Auto Loan Delinquency
Auto loan delinquencies impact more than consumers and lenders. They are an economic indicator and could be a signal of a coming recession, Newsweek reports.
Because an auto loan delinquency affects a borrower’s credit for seven years, it can hinder the ability to qualify for a home loan or any other future loans for several years.
Other Auto Loan Data
Balances on auto loans increased by $12 billion to $1.67 trillion in the fourth quarter of 2025, according to the Quarterly Report on Household Debt and Credit from the Federal Reserve Bank of New York.
There were $181 billion in new car loans showing up on consumer credit reports in the fourth quarter of 2025. This was a small dip from the $184 billion in the third quarter of 2025.
The Bottom Line
The delinquency rate on subprime auto loans climbed to a new high of 6.9%. This is bad news for subprime borrowers and for lenders.
Borrowers are hit with a negative notation on their credit reports that lasts for seven years and face the possibility of losing their cars. Lenders may begin the process of repossessing the car, decide to charge off the loan as a loss, and maybe sell the car at auction.
