The performance of auto loans issued to borrowers with weak credit histories has grown more troubling. For loans classified as “subprime” (commonly defined in these datasets as borrowers with credit scores below about 620), the share of those 60 + days past due recently reached over 6%. In January 2025, for example, about 6.56% of subprime auto‑loan borrowers were at least 60 days late – a level flagged as the worst since data collection began.  

Digging deeper: For June 2025, one widely‑cited estimate reported the 60‑day‑plus delinquency rate for subprime auto loans at 6.31%, up about 69 basis‑points from a year earlier.  Meanwhile, by contrast, borrowers classified as prime (with strong credit at origination) are hardly showing stress: prime auto‐loan delinquencies linger in the 0.3% to 0.4% zone.  

What’s driving it? Several forces:

• Vehicle purchase and financing terms are pressing many households. The average monthly payment on a new vehicle is approaching or over $750, while for used cars the average has risen significantly.  
• Borrowers with weaker credit often end up with older or used vehicles, higher interest rates, longer loan terms — all of which raise risk for delinquency.  
• Broader cost pressures (inflation, rising living expenses) and tighter household financial margins reduce the buffer for subprime borrowers more than for prime borrowers.
• Since the pandemic period, credit‑score migrations and changes in underwriting have shifted who is classified as subprime; some of the alarming headline numbers reflect shifts in the denominator (who counts as subprime) rather than pure deterioration.  

The implications are important.

For lenders: Higher delinquency in subprime auto loans suggests elevated loss‑expectations, which can prompt tighter lending, higher required reserves, and more cautious financing terms in the segment. For investors in auto‑loan asset‑backed securities (ABS) tied to subprime auto debt, the risk of loss is rising.

For borrowers: Falling behind on auto payments affects credit records, means possible repossessions (which remain elevated in some data), and reduces future access to credit — a vicious cycle for financially stressed households. One recent report noted 1.73 million vehicle repossessions last year in the U.S., the most since 2009.  

For the economy: Subprime auto‑loan stress doesn’t necessarily by itself trigger a financial‑system crisis — the volumes are far smaller than mortgages in 2008, and prime borrowers remain largely unaffected. But high delinquency in this segment raises a warning flag about weaker pockets of the consumer credit market, especially since auto loans represent one of the largest categories of non‑mortgage household credit.  

From an editorial view: This is not a full‑scale meltdown, but it is cause for caution. The fact that subprime auto delinquency is climbing to records means the stress is no longer marginal. Since prime borrowers remain largely disciplined, the risk of contagious disruption to the broader credit market is muted — but that’s cold comfort for the households facing these burdens and for the lenders whose portfolios increasingly depend on this higher‑risk segment.

If I were casting a forward look: One critical metric to watch is how many subprime loans move into longer‑term delinquency (90 + days), because that’s when losses deepen and recovery becomes harder. Also worth watching: whether repayment capacity improves (e.g., inflation/living‑cost pressures ease), or whether auto‑financing terms tighten significantly (which could reduce volume in the segment). Lastly, any localized or lender‑specific failure in this space (for instance an auto‑lender heavily exposed to subprime) may signal deeper stress beyond the headline numbers.