The percentage of subprime auto loans falling at least 60 days behind reached 6.9% in January 2026, the highest level since Fitch began tracking the data in 1994.
The troubling milestone raises fresh questions about the financial pressures facing working-class Americans and whether the nation’s auto financing industry has taken on far more risk than it can handle.
Auto Loan Delinquencies Reach Historic Highs
The latest figures paint a troubling picture for Americans with lower credit scores.
According to Fitch, the serious delinquency rate for subprime auto loans included in asset-backed securities climbed to 6.9% in January before easing slightly to 6.8% in February.
Even that modest improvement offered little reassurance. February’s figure remained the highest recorded for that particular month.
Meanwhile, outstanding auto loans and leases totaled approximately $1.68 trillion during the first quarter of 2026, representing an annual increase exceeding $40 billion.
The contrast between borrowers with strong credit and those with weaker financial histories is particularly striking.
Prime borrowers recorded a serious delinquency rate of approximately 0.42%, far below the levels seen among subprime customers.
For perspective, prime auto loan delinquencies peaked at roughly 0.9% during the 2008 financial crisis.
The latest numbers suggest that financial distress is disproportionately affecting Americans who were already struggling to make ends meet.
And the consequences could extend well beyond missed monthly payments.
For many working Americans, losing access to a vehicle can also mean losing reliable transportation to work, making an already difficult financial situation considerably worse.
Risky Lending Practices Raise New Questions
The growing number of delinquent borrowers is drawing renewed attention to how auto lenders approve financing.
Experian estimates that approximately 15% of outstanding auto loans were classified as subprime or deep subprime when originated.
Some lenders have reportedly pushed financing boundaries to extraordinary lengths.
Wells Fargo reportedly explored loans exceeding 140% of a vehicle’s value for borrowers with credit scores as low as 500.
Online vehicle retailer Carvana has also reportedly extended financing to applicants earning as little as $5,000 annually.
Meanwhile, lengthy repayment arrangements have become increasingly prominent throughout the industry.
Loans lasting 72 or 84 months are widely available, while some financing programs stretch to 96 months.
Certain credit unions have even offered repayment periods extending to 120 months.
That means a borrower could spend an entire decade paying off a vehicle that loses value every year.
The longer repayment schedules may reduce monthly bills, but they can also increase total interest expenses and leave drivers owing more than their vehicles are worth.
This problem, known as negative equity, has become a major concern throughout the auto market.
For borrowers already living paycheck to paycheck, an unexpected repair bill, job loss, or reduction in working hours can quickly turn a manageable loan into a financial emergency.
Major Subprime Lender’s Bankruptcy Exposes Industry Vulnerabilities
The collapse of Dallas-based Tricolor Holdings in September 2025 provided another warning about the risks surrounding subprime auto financing.
The company, which specialized in lending to customers with limited credit histories, entered bankruptcy liquidation amid allegations of serious financial misconduct.
Its failure involved nearly $2 billion in debt and more than 25,000 creditors.
Federal investigators have examined allegations that Tricolor used the same groups of auto loans as collateral for financing arrangements with multiple banks.
If established, such conduct would represent a major breakdown in lending controls and collateral verification.
The financial fallout has already reached major institutions.
Fifth Third Bancorp disclosed potential losses approaching $200 million connected to its exposure.
Triumph Financial also moved to recover vehicles associated with financing arrangements involving Texas used-car dealerships.
Tricolor had developed a substantial business serving borrowers who frequently struggled to obtain traditional financing, including undocumented immigrants and customers without established credit records.
Its model relied partly on packaging auto loans into securities that could be sold to investors.
The bankruptcy illustrates how financial problems at one specialized lender can create consequences for banks, investors, dealerships, and borrowers.
Separately, America’s Car-Mart, another company with significant exposure to lower-income vehicle buyers, has faced substantial market pressure.
Its shares have reportedly lost more than 90% of their value from previous highs, reflecting broader investor concerns about the financial health of the subprime auto market.
Biden-Era Inflation Continues to Haunt American Drivers
The crisis is also renewing scrutiny of the economic conditions that developed during former President Joe Biden’s administration.
Vehicle prices surged during the pandemic recovery as manufacturers struggled with semiconductor shortages, supply-chain disruptions, and limited inventories.
At the same time, the Biden administration approved the $1.9 trillion American Rescue Plan in 2021.
Republican critics have long argued that the massive federal spending package added inflationary pressure to an economy already dealing with supply constraints.
Although economists continue to debate the relative contributions of government spending, supply shortages, and other factors, the financial consequences for car buyers have been significant.
Higher vehicle prices forced many consumers to borrow larger amounts.
Then rising interest rates made those loans even more expensive.
The result was a difficult combination: Americans financing costly vehicles while paying substantially more to borrow the money needed to purchase them.
For households with limited savings, those pressures have proven particularly punishing.
The Trump administration now faces an auto financing market still dealing with the consequences of those earlier price increases and lending decisions.
But the problem cannot be solved simply by lowering interest rates.
Borrowers who already owe more than their cars are worth may remain financially trapped even if financing becomes cheaper for future buyers.
America’s Car Debt Problem Could Get Worse
Another troubling development involves changes in how Americans purchase and replace vehicles.
Leasing once accounted for approximately one-third of new vehicle transactions, but its share reportedly dropped below 18% during the period described.
That shift means more consumers are relying on traditional financing arrangements, often with longer repayment periods.
It also means many drivers are holding onto their vehicles longer while continuing to carry substantial debt.
For lenders, the growing delinquency rate creates the possibility of additional repossessions, credit losses, and tighter lending requirements.
For borrowers, those changes could make affordable transportation even harder to obtain.
And for the broader economy, financial trouble among millions of vehicle owners raises concerns about consumer spending and household stability.
The latest Fitch figures do not necessarily signal an economy-wide financial collapse. They measure a particularly vulnerable segment of the auto lending market rather than every American vehicle loan.
Nevertheless, the record-setting delinquency rate underscores a serious affordability problem that policymakers and lenders can no longer ignore.
After years of rising vehicle prices, expensive financing, and increasingly stretched household budgets, the consequences are becoming impossible to overlook.
The question now is whether America’s auto industry can restore affordability before even more drivers find themselves unable to keep the vehicles they depend on.
For millions of families, this is no longer simply a debate about inflation or lending standards.
It is about whether they can afford to keep their cars.
