A new report has found that Americans are missing their car payments at a rate not seen in more than 30 years as borrowers are finding themselves unable to afford the vehicle they purchased.
According to Fitch Ratings, 6.56% of subprime auto borrowers were at least 60 days late on their auto loans in January, the highest percentage found by the agency since it began collecting data in 1994.
The findings help show the financial strain Americans have found themselves under in recent years, as rising costs and high interest rates have forced many to borrow beyond their means, especially when it comes to automobiles.
Last month, the Federal Reserve Bank of New York shared in a report that household debt among Americans, which includes mortgages, auto loans, student loans, and credit cards, has risen to $18.04 trillion, a new record high.
When writing specifically about car loans, the report found that more borrowers are finding themselves falling behind. In the fourth quarter of 2024, the number of auto loans among all borrowers that transitioned into delinquency rose to 3%, the highest level since 2010, according to the bank.
“Higher car prices combined with higher interest rates have driven monthly payments upward and have put pressure on consumers across the income and credit score spectrum,” researchers at the New York Fed wrote.
The increase in delinquency comes at a time when buying a car has become incredibly expensive. For example, Cox Automotive data shows that the price of a new car has risen from around $38,000 in January 2020 to more than $48,500 in January 2025.
On top of the whopping average increase of $10,000, car buyers have also been hit with increased interest rates, making borrowing to buy a car even more painful.
Cox Automotive data shows that in January, the average monthly payment for a new car loan was $755, down from the peak of $795 seen in December 2022 but still well above the 2019 average of $566.
To make matters worse, prices could rise by as much as $12,000 if President Donald Trump’s tariffs go into effect, according to a report from NewsNation.
Concerns about this were so large that Trump granted a one-month exemption on his new tariffs, specifically for auto imports from Mexico and Canada.
Both countries play a pivotal role in U.S. car manufacturing, as companies like Ford and Dodge import parts from the countries despite manufacturing the vehicles domestically. As a result, this would mean prices could rise, as car manufacturers would have to shell out more to get their vehicles to dealerships.