Money's Tight: New Data Shows Auto-Loan Late Pays Keep Climbing
Remember when auto loans were the safe bet in consumer credit? The product lenders could count on because people would move heaven and earth to keep their car? Yeah, those days are apparently over. VantageScore just released data showing auto loan delinquencies have risen over 50% since 2010, transforming what used to be one of the safest credit products into one of the riskiest. Only student loans are worse now.
The latest figures show 1.6% of total auto loans are 60 days or more past due as of July 2025. That might not sound catastrophic until you realize this trend is accelerating across all income brackets and credit tiers. Near Prime and Prime borrowers saw late payments increase faster than subprime borrowers on an absolute basis. When people with good credit start missing car payments at elevated rates, that's not a credit problem. That's an affordability crisis.
VantageScore's February 2025 data showed auto loan delinquencies increased across every Days Past Due category for the second straight month. The average VantageScore credit score dropped to 701, the first decline in 11 months. Overall late-stage delinquencies surged, partially driven by auto loans and renewed student loan reporting. Translation: people are making tough choices about which bills to pay, and car payments are slipping down the priority list.
The root cause isn't mysterious. New car prices have risen more than 25% since 2019 and now average over $50,000. The average monthly payment on a new car hit $767 in the third quarter, with one in five borrowers paying over $1,000 monthly. That's mortgage-level money for a depreciating asset. Auto loan balances have grown 57% since 2010, outpacing all other credit products. People are stretching loans to seven years or more just to get payments they can theoretically afford.
This payment stretching creates another problem: negative equity. An increasing number of consumers owe more on their car loans than their vehicles are worth. This happens when you finance nearly the entire purchase price over seven or eight years on a vehicle that depreciates fastest in its first few years. You're underwater from day one and stay that way for years. When financial stress hits, you can't even sell the car to escape the payment because you'd still owe money after the sale.
Rising car prices and financing costs are only part of the story. Insurance and repair costs are rapidly escalating, reducing visibility into true monthly ownership costs. Many buyers focus solely on the monthly payment when making purchase decisions, not realizing they're signing up for insurance bills that can easily exceed $200 monthly and maintenance costs that keep climbing as vehicles become more complex.
VantageScore noted that lenders adjusted lending criteria in 2022 and 2023 in response to rising losses, but delinquencies haven't decreased. The changes reduced delinquencies among subprime borrowers somewhat, but losses in Near Prime and Prime segments climbed rapidly, more than offsetting any gains. Tightening credit standards can't fix an affordability problem when the core issue is that cars simply cost too much for what average Americans earn.
The data also shows increased balances on personal loans are highly correlated with auto loan delinquencies, suggesting some consumers are taking out personal loans to cover cashflow shortfalls. That's a debt spiral in slow motion. When you need to borrow money to make your car payment, you're not managing debt anymore. You're treading water and hoping conditions improve before you go under.
What's particularly concerning is that this trend shows no signs of reversing. Automakers continue pushing expensive trucks and SUVs while offering fewer affordable models. Average wages are still trailing inflation and won't catch up until mid-2026 according to some analyses. High interest rates persist. In VantageScore's own words, consumers are in a more precarious position than they've been since the last recession. And unlike mortgages, which take months to foreclose, cars can be repossessed relatively quickly. Auto delinquencies serve as a canary in the coal mine, and right now, that canary is looking pretty unwell.
