For years, economists warned that Americans were borrowing too much to buy cars they couldn't really afford. Now, those warnings are playing out in real time.

Auto loan delinquencies have reached a 15-year high, according to new data from TransUnion and the Federal Reserve. The overall 60-plus day delinquency rate hit 1.38% in Q1 2025, exceeding the 1.33% peak recorded during the depths of the 2009 financial crisis. For subprime borrowers—those with credit scores below 620—the picture is even grimmer: 6.6% of subprime auto loans were 60 or more days delinquent in January 2025, the highest level since tracking began in 1994.

And the trend isn't reversing. TransUnion projects the auto delinquency rate will tick up slightly to 1.54% by year-end 2026, marking the fifth consecutive year of increases.

How We Got Here

The roots of today's auto loan crisis trace back to 2020 and 2021, when a unique set of circumstances masked underlying financial stress. Cash stimulus checks, moratoriums on mortgage foreclosures and auto repossessions, and student loan forbearance programs kept delinquency rates artificially low—giving the impression of a healthier consumer than reality warranted.

When those programs ended and inflation surged, the true picture emerged. Vehicle prices had spiked during pandemic-era supply chain disruptions, meaning buyers were borrowing more than ever for their cars. Interest rates subsequently rose to their highest levels in decades, making those larger loans even more expensive to carry.

The result: 15.78% of subprime auto loans were at least 30 days delinquent as of September 2025—the highest level since the Federal Reserve began tracking this data in 2000.

The 7.5-Year Loan Trap

Faced with unaffordable monthly payments, many consumers are turning to a dangerous solution: stretching their loans to extreme lengths.

According to industry data, consumers are increasingly refinancing into longer terms to manage elevated payments. Refinance volume hit 121,000 transactions totaling $3.8 billion during Q3 2025, with borrowers securing average rate reductions of 2.08 percentage points—saving roughly $77 per month.

But that relief comes at a cost. After refinancing, effective loan terms now average 90.57 months—or 7.5 years. To put that in perspective, a standard auto loan was once 48 months. Then 60 months became normal. Now, borrowers are committing to payments that extend well beyond the useful life of many vehicles.

This creates a structural problem: when it comes time to trade in or sell, many owners find themselves "underwater"—owing more on the loan than the car is worth. That negative equity gets rolled into the next purchase, creating a debt spiral that becomes increasingly difficult to escape.

Who's Most Affected

The delinquency surge is hitting lower-income consumers hardest. Subprime borrowers, who typically have fewer financial resources to weather unexpected expenses, are seeing delinquency rates nearly five times higher than the overall market.

The geographic distribution is also uneven. States with lower median incomes and higher concentrations of subprime borrowers are reporting the steepest increases in missed payments. Meanwhile, prime borrowers with strong credit continue to perform relatively well, creating a bifurcated market that mirrors broader trends in consumer finance.

Used car buyers face particular pressure. During the pandemic, used vehicle prices spiked by more than 40%, and while they've moderated somewhat, many buyers who purchased in 2021 or 2022 are still carrying loans that reflect those inflated prices.

A Stabilizing Trend?

The silver lining, such as it is, comes from the pace of deterioration. While delinquencies are rising, each year's uptick has been progressively smaller. TransUnion predicts an increase of just 3 basis points in 2026—hardly the sharp acceleration that would signal a full-blown crisis.

"This is the fifth straight year of auto loan delinquency growth, but the rate of increase has slowed considerably," noted a TransUnion analyst. "Lenders aren't dramatically tightening or pulling back from riskier borrowers, which suggests they see the situation as manageable."

Credit card trends offer additional context. TransUnion projects credit card balances to grow just 2.3% year over year in 2026—the smallest annual increase since 2013. Card balances are expected to reach $1.18 trillion by year-end 2026, up from $1.16 trillion in 2025. If consumers were truly in crisis, card balances would likely be rising faster as households tap credit to cover necessities.

What Borrowers Can Do

For those struggling with auto loan payments, experts recommend several strategies:

  • Refinance strategically: If your credit has improved since you took out the loan, you may qualify for a lower rate. Just be wary of extending the term so far that you end up paying more in total interest.
  • Consider downsizing: If you're underwater on your current vehicle, selling and moving to a less expensive car—even if it means taking a loss—may be better than continuing to make payments you can't afford.
  • Communicate with lenders: Many lenders offer hardship programs that can provide temporary relief through deferred payments or modified terms. The key is to reach out before you miss payments, not after.
  • Build an emergency fund: The best defense against auto loan stress is having cash reserves to cover unexpected expenses without tapping credit or missing payments.

The Bigger Picture

The auto loan delinquency surge is a symptom of broader affordability challenges facing American consumers. Vehicle prices, while off their peaks, remain elevated. Insurance costs have risen sharply. And wages, while growing, haven't kept pace with the total cost of car ownership.

For the economy, elevated auto delinquencies create risk but not—at least for now—systemic danger. Auto loans are a relatively small portion of household debt compared to mortgages, and lenders have been building reserves for expected losses.

But for individual families, the stress is real and immediate. The car that was supposed to get them to work, pick up the kids, and provide a sense of normalcy has become a source of monthly anxiety. That's a crisis that no delinquency rate can fully capture.