Auto Loan Delinquencies Just Hit a 32-Year Record as the Average New Car Costs Nearly $50,000 and Monthly Payments Approach $750: Inside the Quiet Crisis Squeezing 85 Million American Borrowers

There is a financial crisis unfolding in America that does not get the cable news chyrons or the congressional hearings, but it affects more households than the housing crisis ever did. Roughly 85 million Americans carry an auto loan. As of January 2026, subprime borrowers who are at least 60 days behind on their car payments have reached 6.65%, according to Fitch Ratings data. That is the highest delinquency rate in 385 months, a 32-year record that stretches back to 1993, before many of today's borrowers were born.

The average new car in America now costs nearly $50,000. The average monthly payment on a new vehicle has climbed to $748. Used cars average $532 per month. Add insurance, which has risen by double digits in most states over the past two years, and the total cost of operating a vehicle now exceeds $1,000 per month for millions of American families, a figure that would have seemed absurd a decade ago and is now simply the price of getting to work.

How We Got Here

The auto loan crisis did not arrive overnight. It was built, layer by layer, over a decade of compounding trends that each seemed manageable in isolation but proved devastating in combination.

Vehicle prices surged during the pandemic-era chip shortage, when manufacturers could not produce enough cars to meet demand and dealers charged thousands above sticker price. When the supply chain normalized in 2023 and 2024, prices did not return to pre-pandemic levels. Manufacturers discovered that selling fewer units at higher prices was more profitable than the volume game they had played for decades. The average transaction price for a new vehicle was $38,000 in 2019. It crossed $48,000 in 2025 and has continued climbing.

Interest rates compounded the damage. The Federal Reserve's rate-hiking campaign pushed the average auto loan rate from roughly 4.5% in early 2022 to above 7% for new vehicles and north of 11% for used vehicles by mid-2024. Even as the Fed began cutting rates in late 2024, auto loan rates have remained elevated because banks and credit unions tightened lending standards in response to rising delinquencies, adding a risk premium that offsets the reduction in benchmark rates.

The result is a monthly payment that jumped nearly 30% between 2020 and 2024, from an average of $470 to roughly $600, and has continued rising to $748 for new vehicles as of early 2026. For a household earning the median income of approximately $78,000, that payment represents nearly 12% of gross income, a debt service burden that consumer finance experts consider unsustainable.

The Delinquency Cascade

What makes the current delinquency data particularly alarming is that the problem is no longer confined to subprime borrowers. While the 32-year record is concentrated in the subprime segment, defined generally as borrowers with credit scores below 620, the ripple effects are spreading upward. Near-prime borrowers (620-659) have seen their 60-day delinquency rates rise to levels not seen since 2010. Even prime borrowers (660-719) are showing elevated stress, with delinquency rates ticking up for three consecutive quarters.

"This is not a subprime-only problem anymore," said Mark Zandi, chief economist at Moody's Analytics. "Affordability strain from record vehicle prices, higher insurance costs, and elevated monthly payments is pushing delinquencies across the credit spectrum. The borrowers who are 60 days late today were 30 days late six months ago and current a year ago. The trajectory is what should concern policymakers."

Repossessions have risen in tandem. Auto repossession rates increased by approximately 23% in 2025 compared to 2024, according to data from Cox Automotive. The increase is most pronounced in states with high insurance costs and limited public transportation options, where losing a vehicle can trigger a cascade of consequences including job loss, inability to access childcare, and eventual housing instability.

The Tariff Multiplier

Into this already stressed environment, the federal government has introduced a new variable: tariffs. The 25% duty on imported vehicles, originally imposed under the IEEPA authority that the Supreme Court partially struck down last week, survived the ruling because it was implemented under a separate statutory authority. Industry analysts estimate the tariff will add between $3,000 and $10,000 to the price of a new imported vehicle, depending on the country of origin and the percentage of components sourced domestically.

Even domestically assembled vehicles are not immune. Modern automotive supply chains are deeply integrated across borders, with engines, transmissions, electronics, and raw materials crossing the U.S.-Mexico and U.S.-Canada borders multiple times during production. The auto industry estimates that tariff-related cost increases will affect roughly 60% of vehicles sold in the United States, including many that carry "Made in America" branding.

The used car market, which has historically served as a pressure valve when new car prices rise beyond affordability, is already reflecting the impact. Used vehicle prices, which had been declining for much of 2024 and early 2025, reversed course in January and are now climbing again as buyers who would have purchased new vehicles migrate to the secondhand market.

What Borrowers Can Do

For the millions of Americans currently struggling with auto loan payments, the options are limited but not nonexistent. Refinancing into a lower rate is possible for borrowers whose credit has improved since origination, and several online lenders now offer auto refinancing with no fees and rates that are 1 to 2 percentage points below the national average.

Loan modification programs, where the lender extends the loan term to reduce the monthly payment, are available from most major auto lenders but are underutilized because many borrowers are unaware they exist. The Consumer Financial Protection Bureau recommends contacting the lender directly at the first sign of financial difficulty rather than waiting until the account is already delinquent.

For borrowers who are underwater on their loans, meaning they owe more than the vehicle is worth, voluntary surrender is generally preferable to involuntary repossession because it avoids the additional fees and credit damage associated with the repossession process. However, both options result in a deficiency balance that the borrower remains legally responsible for unless it is separately negotiated or discharged.

The auto loan crisis is not a future risk. It is a present reality for millions of American families, and the forces that created it, from elevated vehicle prices to high insurance costs to newly imposed tariffs, show no sign of reversing. For 85 million borrowers, the monthly payment is the most consequential number in their financial lives, and for a growing share of them, it is a number they can no longer afford.