American auto borrowers are falling behind on their payments at a pace not seen in more than three decades. About 5.6 percent of U.S. auto debt is now 90 days or more past due, a level that Federal Reserve data places at the worst reading since 1994. The deterioration signals that millions of households stretched by higher vehicle prices and elevated interest rates are running out of room to absorb monthly car payments.
Post-pandemic payment burdens are driving the surge
The Federal Reserve tracks delinquency rates on loans and leases at commercial banks in a long-running statistical release that covers past-due and nonaccrual balances across major loan categories. That series reaches back into the early 1990s, making the current reading a clear outlier against nearly three decades of quarterly observations. A separate FDIC-sourced series published through the Federal Reserve Bank of St. Louis provides quarterly dollar amounts for balances 90 days or more past due at all FDIC-insured institutions, with records stretching to 1984. Both datasets confirm that the broader credit cycle has turned sharply, and that stress in consumer credit is no longer confined to a few niche segments.
The question is why auto loans are deteriorating faster than other consumer categories. A Federal Reserve research note published in November 2025, drawing on New York Fed Consumer Credit Panel and Equifax data through the third quarter of that year, points to two forces: heavier payment burdens on recently originated loans and risk segmentation among newer borrowers. In that analysis of consumer delinquency dynamics, Fed economists highlight that vehicles financed during 2022 and 2023 carried sticker prices inflated by pandemic-era supply shortages, and the loans attached to those purchases locked in interest rates well above pre-pandemic norms. Borrowers who stretched to afford those payments now face tighter household budgets as wage growth has cooled and other costs, from insurance to maintenance, have continued to climb.
These newer loans are structurally more fragile. Longer loan terms, often stretching to six or seven years, were used to keep monthly payments within reach despite higher prices and rates. That strategy reduced initial payment shock but left borrowers with slow-amortizing balances and less equity in their vehicles. If a household encounters even a modest income disruption, there is little cushion: selling the car may not fully cover the outstanding loan, and refinancing is harder with higher rates and weaker credit scores. The result is a growing cohort of borrowers who are one unexpected expense away from falling seriously behind.
Risk segmentation adds another layer. The Fed note points out that delinquency rates have risen most sharply among younger and lower-score borrowers, who were more likely to finance near the peak of prices and rates. Many of these households also carry heavier burdens from other forms of debt, including credit cards and personal loans that became more expensive as benchmark interest rates climbed. When budgets are triaged each month, some borrowers prioritize rent and essential utilities over auto payments, even though losing a vehicle can jeopardize their ability to work.
The hypothesis that credit unions and captive finance companies are absorbing more of the pain than traditional banks has some logical support. Those lenders expanded auto originations aggressively when demand surged, and they historically carry higher shares of near-prime and subprime paper. Captive finance arms, tied to specific manufacturers, often used promotional offers and flexible underwriting to move inventory in a constrained supply environment. Credit unions, for their part, leaned on member relationships and competitive rates to gain market share. Both strategies likely increased exposure to borrowers with thinner financial buffers.
The Fed’s available data, however, does not break out 90-day delinquencies by lender type or origination cohort in enough detail to confirm that split. What the data does show is that the aggregate delinquency rate has climbed past every quarterly reading recorded since the mid-1990s, even as unemployment remains relatively low by historical standards. That divergence suggests that the current wave of auto stress is less about a classic jobs-driven recession and more about the cumulative strain of high prices, elevated borrowing costs, and limited savings among vulnerable households.
Fed data and its limits on the 5.6 percent figure
The widely cited 5.6 percent estimate aligns with the direction of multiple Federal Reserve datasets, but the precise number requires careful sourcing and interpretation. The Federal Reserve’s charge-off and delinquency release reports rates for broad loan categories at commercial banks, not for auto loans in isolation, so its figures must be read as indicative rather than definitive for autos. The FRED series on 90-day past-due balances covers total loans and leases at FDIC-insured institutions, again without auto-specific segmentation, and therefore captures stress across mortgages, commercial loans, and other credit alongside vehicles.
By contrast, the November 2025 FEDS Notes research paper draws on loan-level CCP/Equifax data that explicitly identifies auto loans and tracks their performance over time. That microdata allows Fed researchers to separate autos from other consumer credit and to compare delinquency trends across origination years, credit score bands, and age groups. While the paper does not present a single headline number identical to the 5.6 percent figure, its description of rising 90-day delinquency rates through the third quarter of 2025 is consistent with the notion that serious auto loan distress has reached levels last seen in the mid-1990s.
The limitations of the public datasets mean analysts should treat 5.6 percent as a reasonable approximation rather than a precise, officially endorsed statistic. Still, the exact decimal point matters less than the underlying trajectory. Across multiple sources, the message is the same: a growing share of American auto borrowers are falling seriously behind, and the combination of high vehicle prices and elevated interest rates has left many households with little margin for error. Unless incomes rise faster or financing costs ease meaningfully, delinquency pressures in the auto market are likely to remain a central fault line in the broader consumer credit landscape.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
