Why a Record 5.6 Percent of Auto Loans Are Now 90 Days Late

More drivers than at any point in the Federal Reserve Bank of New York’s records are falling seriously behind on their car payments. The share of auto loan balances that are 90 days or more delinquent hit 5.60 percent in the first quarter of 2026, according to the New York Fed’s Consumer Credit Panel. That is up from 5.21 percent the previous quarter and well above the 3.59 percent long-term average. It also breaks a record set in the 2008 financial crisis.

A Number That Has Never Been This High

The New York Fed’s household debt data goes back to 2003. Before this year, the worst stretch for serious auto loan delinquency came in the fourth quarter of 2010, when 5.3 percent of balances were 90-plus days past due, a hangover from the recession that cost millions of Americans their jobs. The 5.60 percent figure recorded for the first quarter of 2026 has now surpassed that peak, without a recession or mass layoffs to explain it.

The climb has not been sudden. Serious delinquency stood at 4.41 percent in the first quarter of 2024, then rose steadily through 2025 before crossing into record territory this year. Two other measures in the same report show the data is not uniformly worse than a year ago: the flow of loans into early-stage delinquency was 7.72 percent in the first quarter of 2026, down slightly from 7.99 percent a year earlier, and the flow into serious delinquency held roughly steady at 2.97 percent, compared with 2.94 percent a year ago. In other words, new loans are not falling behind any faster than before. The record level reflects loans that have been struggling for a while finally crossing the 90-day threshold, and lenders being unable to work through the backlog fast enough to bring the overall rate back down.

Subprime Borrowers Are Carrying the Burden

The overall figure hides a sharp divide by credit quality. Data from Fitch Ratings, tracked by industry analyst Bill Ploog, shows that delinquencies of 60 days or more among subprime borrowers hit their highest level in 32 years in January 2026, the worst reading in a dataset stretching back to 1994. Fitch’s numbers show subprime delinquency has stayed elevated for nearly four consecutive years, from 2023 through early 2026, while prime borrowers, those with strong credit, have remained financially healthy throughout the same period. The auto loan crisis, in other words, is not spread evenly. It is concentrated among buyers who could least afford a financial shock in the first place.

How Buyers Got Here

Average new vehicle transaction prices climbed to roughly $49,220 this year as tariffs added thousands of dollars to sticker prices, and the average monthly car payment has followed, landing in the $748 to $772 range according to recent industry data. A growing share of those payments now top $1,000 a month, and they are increasingly attached not to luxury vehicles but to ordinary family cars financed at high interest rates over long terms.

To keep those payments looking manageable on paper, lenders have leaned harder on tools that shrink the monthly bill in the short run while leaving borrowers more exposed over the life of the loan. That shift shows up most clearly in how long these loans now run and how much lenders are willing to advance against a car’s actual worth.

The Loan Terms Driving the Trouble

Seventy-two and 84-month auto loans, once considered unusual, are now common financing options at dealerships nationwide, and some credit unions have begun offering 120-month terms on new vehicle purchases. A borrower who signs a 10-year loan for a depreciating vehicle is effectively locked out of trading in or upgrading for the better part of a decade, and remains underwater, owing more than the car is worth, for a large portion of that span.

The decline of leasing has compounded the shift toward long loans. Leasing once accounted for roughly a third of new vehicle transactions, giving automakers and dealers a built-in mechanism to cycle buyers back into the market every three years. That share has fallen to somewhere near 17 to 18 percent industry-wide as manufacturers pulled back on subsidized lease programs amid recent supply disruptions, leaving longer-term financing to fill the gap and pushing more buyers into the kind of extended commitments now showing up as delinquencies years later.

Loan-to-value ratios have stretched as well. Some lenders have piloted programs allowing borrowers with credit scores in the 500 to 600 range to finance more than 140 percent of a vehicle’s actual value, rolling in taxes, fees, warranties and sometimes even the negative equity from a previous car loan. A buyer who starts a loan already owing 40 percent more than the vehicle is worth has almost no cushion if income drops, an unexpected expense arrives, or interest rates on a variable product move against them.

What Falling Behind Actually Means for a Borrower

A loan becomes seriously delinquent once a borrower is 60 or more days behind on payments, the point at which lenders typically begin considering repossession. When a vehicle is repossessed, it is sent to auction and usually sells for far less than what is owed, leaving the former owner both without a car and on the hook for the remaining balance, on top of a credit score hit that can take years to repair.

Auto loan payments are reported to credit bureaus and factored into most scoring models, so a 90-day-late mark does more damage to a credit file than most other forms of debt trouble, and it can follow a borrower into future car shopping, apartment applications and even some job searches for years afterward.

What Drivers Struggling With a Car Payment Can Do

Anyone falling behind on a car loan has more options than simply waiting for a repossession notice. Contacting the lender directly, before a payment is missed if possible, opens the door to loan modification, a temporary deferment, or a revised payment plan in many cases, as lenders generally prefer to avoid the cost and hassle of repossession and resale. Federal and state consumer protection agencies, including the Consumer Financial Protection Bureau, publish free guidance on negotiating with auto lenders and understanding repossession rights, which vary significantly by state.

Buyers who have not yet financed a vehicle can protect themselves by working backward from a monthly payment they can comfortably afford rather than the maximum a lender approves, checking the total interest cost of a loan rather than focusing only on the monthly figure, and avoiding terms longer than 60 to 72 months whenever possible. A loan-to-value ratio close to 100 percent, meaning the loan roughly matches the car’s actual worth, is a far safer position than one that leaves a buyer underwater from the day they drive off the lot.

The record delinquency rate is also being watched closely by Wall Street, as many of these loans are bundled and sold to investors as asset-backed securities. Analysts have drawn comparisons to the run-up in mortgage lending before the 2008 housing crisis, though auto loans are a far smaller share of the overall economy than mortgages were at that time.

Sources:

• https://www.newyorkfed.org/newsevents/news/research/2026/20260512
• https://caredge.com/guides/auto-loan-crisis-32-year-record
• https://www.cnbc.com/2026/05/28/monthly-auto-loan-payments-above-1000-growing.html