The US auto loan market has seen a moderate rise in debt balances during the fourth quarter of 2024, with delinquencies particularly affecting auto loans and credit cards. According to the latest Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data, auto loan balances have grown by $48 billion since 2011, largely driven by originations to very prime borrowers with credit scores above 760.
Despite this growth, delinquency rates have been rising across all credit score bands and income levels. The median credit score of newly opened loans has increased slightly since the end of 2022, but delinquencies have still risen overall. In fact, borrowers with lower credit scores now face a higher likelihood of becoming delinquent, with those with credit scores between 620 and 679 having around a 4% chance over the course of 2024.
Delinquency rates also vary significantly by lender type, with non-captive auto finance companies having worse performance. These loans are more likely to be given to borrowers with lower credit scores and are more prone to delinquencies. In contrast, captive lenders tend to perform better, with median credit scores above 760 for newly opened loans.
The rise in delinquency rates has also been affected by neighborhood income levels. Borrowers in lower-income areas have seen the most pronounced increase in delinquency rates, while those in higher-income areas have experienced a smaller rise. However, even borrowers in higher-income areas face challenges with auto loan delinquencies.
Overall, while the US household debt landscape remains stable for many consumers, the auto loan market faces significant challenges driven by rising car prices and interest rates. Borrowers across all credit score bands and income levels are feeling the pressure, highlighting the need for greater attention to auto loan performance and lending practices.
Source: https://libertystreeteconomics.newyorkfed.org/2025/02/breaking-down-auto-loan-performance