Rising car prices, high interest rates, and stagnant wages are leaving many Americans struggling to keep up with auto loan payments. The average monthly payment for new vehicles has climbed to record highs. Analysts warn that auto loans are now among the riskiest forms of consumer credit, as more households face financial strain and lenders tighten standards to limit exposure to potential defaults.
A recent VantageScore study, as quoted by CBS News, revealed that auto loan delinquency rates have surged by over 50% in the past 15 years. The report notes that this troubling rise shows no signs of slowing, even as delinquency rates for other credit products - such as credit cards, personal loans, and home equity loans - have steadily declined.
"Back in 2010, auto loans were the least risky of all products at that point in time," Rikard Bandebo, chief economist at VantageScore, said in a recent video. "Now, as we look at 2025, it's actually - excluding student loans - the riskiest credit product."
After a brief decline during the pandemic, auto loan delinquencies in the US are once again on the rise. Federal Reserve data shows that as of June 2024, 3.8% of auto loan balances were at least 30 days past due - the highest rate since June 2010. This increase spans all income levels, indicating widespread financial strain among American households.
Notably, VantageScore’s analysis reveals that even prime borrowers - those with higher credit scores - have seen delinquency rates climb faster in absolute terms than subprime borrowers. According to CBS News, the trend highlights growing pressure from high car prices, elevated interest rates, and tighter household budgets across the economic spectrum.
"The broad-based decline in consumer credit quality indicates that economic pressures are no longer concentrated among some VantageScore credit tiers and income levels," Susan Fahy, executive vice president and chief digital officer at VantageScore, said in a statement.
In a shocking analysis, VantageScore also revealed that the average auto loan amount has surged by 57% over the past 15 years - a sharper increase than any other type of consumer credit, including mortgages.
One major burden for car owners is the sharp rise in monthly payments. Federal Reserve data shows the average car payment jumped by about $130 between January 2020 and January 2023, reaching $600 - more than four times in a three-year span.
In comparison, payments rose only $40 in the three years before the pandemic, from $430 to $470. The upward trend hasn’t stopped - auto researcher Edmunds reports, as mentioned by CBS Newe, that one in five new car loans now carries a monthly payment of over $1,000, underscoring the growing financial strain on borrowers.
Soaring car prices and higher interest rates are driving up monthly payments. According to September data from Cox Automotive, as told to CBS News, the average price of a new vehicle has surpassed $50,000 - the highest level on record.
Experts say broader economic forces are also driving the rise in auto loan delinquencies. According to Fahy of VantageScore, inflation, higher borrowing costs, and an uncertain job market are key contributors. Although inflation has eased since peaking in 2022, many Americans continue to struggle with elevated prices that outpace wage growth.
According to CBS News, a Bankrate analysis of Bureau of Labor Statistics data shows that while the gap between earnings and inflation is narrowing, average wages are still lagging - and may not fully catch up until mid-2026 - leaving many households under persistent financial strain.
A recent VantageScore study, as quoted by CBS News, revealed that auto loan delinquency rates have surged by over 50% in the past 15 years. The report notes that this troubling rise shows no signs of slowing, even as delinquency rates for other credit products - such as credit cards, personal loans, and home equity loans - have steadily declined.
"Back in 2010, auto loans were the least risky of all products at that point in time," Rikard Bandebo, chief economist at VantageScore, said in a recent video. "Now, as we look at 2025, it's actually - excluding student loans - the riskiest credit product."
RISE IN AUTO LOAN DELINQUENCY RATES POST PANDEMIC
After a brief decline during the pandemic, auto loan delinquencies in the US are once again on the rise. Federal Reserve data shows that as of June 2024, 3.8% of auto loan balances were at least 30 days past due - the highest rate since June 2010. This increase spans all income levels, indicating widespread financial strain among American households.
Notably, VantageScore’s analysis reveals that even prime borrowers - those with higher credit scores - have seen delinquency rates climb faster in absolute terms than subprime borrowers. According to CBS News, the trend highlights growing pressure from high car prices, elevated interest rates, and tighter household budgets across the economic spectrum.
"The broad-based decline in consumer credit quality indicates that economic pressures are no longer concentrated among some VantageScore credit tiers and income levels," Susan Fahy, executive vice president and chief digital officer at VantageScore, said in a statement.
In a shocking analysis, VantageScore also revealed that the average auto loan amount has surged by 57% over the past 15 years - a sharper increase than any other type of consumer credit, including mortgages.
BIG RISE IN AVERAGE MONTHLY PAYMENTS
One major burden for car owners is the sharp rise in monthly payments. Federal Reserve data shows the average car payment jumped by about $130 between January 2020 and January 2023, reaching $600 - more than four times in a three-year span.
In comparison, payments rose only $40 in the three years before the pandemic, from $430 to $470. The upward trend hasn’t stopped - auto researcher Edmunds reports, as mentioned by CBS Newe, that one in five new car loans now carries a monthly payment of over $1,000, underscoring the growing financial strain on borrowers.
Soaring car prices and higher interest rates are driving up monthly payments. According to September data from Cox Automotive, as told to CBS News, the average price of a new vehicle has surpassed $50,000 - the highest level on record.
AUTO LOAN DELINQUENCIES RISING DUE TO ECONOMIC FORCES?
Experts say broader economic forces are also driving the rise in auto loan delinquencies. According to Fahy of VantageScore, inflation, higher borrowing costs, and an uncertain job market are key contributors. Although inflation has eased since peaking in 2022, many Americans continue to struggle with elevated prices that outpace wage growth.
According to CBS News, a Bankrate analysis of Bureau of Labor Statistics data shows that while the gap between earnings and inflation is narrowing, average wages are still lagging - and may not fully catch up until mid-2026 - leaving many households under persistent financial strain.
