Nearly 1 out of 12 Auto Loans is now Delinquent

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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.

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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.

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• 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

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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.