Nearly 1 out of 12 Auto Loans is now Delinquent

Americans are falling behind on auto loan payments at a rate not seen in 13 years. At the end of March, 7.9% of auto loans transitioned into delinquency on an annualized basis, which means that approximately 1 out of 12 auto loans is now delinquent or overdue in payment.

According to the New York Fed, auto loans opened in 2022 and 2023 are performing worse than in pre-pandemic years due to higher car prices, which may have caused buyers to borrow more at inflated rates.

• 17.5% of borrowers now have monthly car payments of more than $1,000, per Edmunds

• The average auto loan interest rate for new cars at the end of 2023 was 7.18%, per Bankrate

While researchers are hesitant to sound the panic alarm, the surge in auto loan delinquency rates is worth monitoring. This metric can be a precursor to real economic pain—lost jobs, weak wages, and a slowdown in GDP growth.

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