Auto loan delinquencies among subprime borrowers reached a nearly-30-year high in September of 6.1% – the highest rate since 1994

Auto loan delinquencies among subprime borrowers reached a nearly-30-year high in September of 6.1% – the highest rate since 1994, per the Fed.

The ability of car owners to afford their vehicle payments is being hampered by higher car prices and increasing interest rates. Data from Fitch Ratings reveals that 6.1% of subprime auto borrowers are at least 60 days overdue on their loans, marking the highest percentage since 1994. This figure has surged from 2.6% reported in May 2021.

The combination of elevated vehicle prices, borrowing costs, and ongoing inflation is contributing to a growing number of Americans falling behind on their auto loans. Federal Reserve officials predict that high-interest rates will persist through 2026.

The situation is particularly challenging for Generation Z and millennials, who recorded higher auto loan delinquency rates last year compared to pre-pandemic levels. With interest rates for used cars averaging 13.5%, those with the worst credit may face rates as high as 21%.