Americans are behind on car payments at a record level

Americans are missing their car payments at the highest rate in decades, with 6.6% of subprime auto borrowers being at least 60 days past due on their loans as of January 2025. This is the highest level since Fitch Ratings began collecting data, with the next highest subprime delinquency rates seen in the fall and winter of 2024. In contrast, prime borrower scores are faring better, with 0.39% 60-day delinquencies in January 2025, up from 0.35% in January 2024. The rising cost of car ownership is driving the trend, with vehicle prices averaging just under $50,000 and high loan rates translating to steep monthly payments. Car insurance rates are also up 19% year over year, while repair and maintenance costs have risen 33% since 2020. Other metrics, such as consumer confidence and credit card delinquencies, are also showing warning signs. The number of credit card holders only making minimum payments has reached a 12-year high, and 30-day delinquencies have risen to 3.52%, double the rate from the pandemic low in 2021. Delinquencies tend to increase in January and February after the holidays, but low-income borrowers will continue to be affected this year due to inflation and interest rates. Fitch Ratings has stated that subprime auto loans face a deteriorating outlook for 2025. Overall, the rising cost of car ownership is putting pressure on consumers, particularly low-income borrowers, who are showing signs of financial stress.