Subprime Auto Delinquencies Hit Record High, Flashing Warning Signs
The rate of seriously late payments for subprime car loans has surpassed 2009 levels, a key indicator of rising financial stress among American consumers.
A crucial barometer of U.S. consumer health is flashing its brightest warning sign in a generation, as the rate of seriously delinquent subprime auto loans has surged to the highest level on record.
The percentage of subprime borrowers who were more than 60 days late on their car payments climbed to 6.6% in the first quarter of 2025, according to data from Fitch Ratings. This figure surpasses the peak seen during the 2009 financial crisis and marks the highest rate since the data was first tracked in 1994, signaling mounting financial pressure on a vulnerable segment of the population.
This spike in auto loan defaults is not an isolated event but rather a symptom of broader economic strains. It comes as households contend with the cumulative effects of inflation, dwindling pandemic-era savings, and the highest interest rates in decades. The U.S. personal saving rate stood at 4.6% in August 2025, a significant decline from the stimulus-fueled highs and a return to pre-pandemic levels that offer less of a financial cushion.
At the same time, Americans are leaning more heavily on credit to manage their expenses. Total U.S. credit card balances have swelled, reaching $1.21 trillion in the second quarter of 2025, according to data from the Federal Reserve Bank of New York. The combination of rising debt and falling savings creates a precarious situation for many households, where a single unexpected expense can lead to a cascade of missed payments, starting with assets like automobiles.
“The surge in subprime delinquencies is a clear signal that the lower-income consumer is under significant duress,” one analyst noted. “While the prime borrower remains relatively healthy, the stress at the subprime level is often a leading indicator for wider economic weakness.”
The data adds to a growing chorus of concerns on Wall Street that the financial resilience that powered the post-pandemic economy may be waning. This potential slowdown in consumer spending poses a risk to a wide range of sectors, from retail and hospitality to the financial institutions that underwrite the loans. According to a recent consumer outlook report from Morgan Stanley, spending growth is projected to slow in the coming year as the labor market cools and households prioritize necessities.
For the auto industry, the trend could signal future headwinds. While vehicle repossessions have not yet reached crisis levels, a continued rise in delinquencies would eventually lead to an increased supply of used cars at auction, potentially depressing used vehicle prices and impacting profitability for both lenders and dealerships.
As policymakers at the Federal Reserve monitor for signs of economic cooling, the distress signals from the subprime auto market provide a tangible data point. While not catastrophic on its own, the record level of delinquencies serves as a potent reminder that the foundation of consumer strength is showing visible cracks.