Is America’s Auto Loan Crisis Here?

Issue ##150

Hello! Did you know that auto loan delinquencies have reached the highest level in decades? The automotive industry might have to brace for challenging times

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In The Know

Is America’s Auto Loan Crisis Here?

An article published in March of this year flew under the radar of most automotive news outlets, and it had stern warnings of what was to come. Late car payments were the highest they had ever been since 1994. 

Almost no outlet, from the small to the big, covered what was going on. (Yes, we ignored it as well, mea culpa.) You can revisit the article here. 

Now, the problem is much worse, and there might be no turning back. Many even warned of the auto loan bubble bursting, and then, yesterday, Tricolor Holdings collapsed. 

The name might not ring a bell, but it’s one of the nation’s biggest auto lenders, focused on providing car loans to people with bad credit scores. You can read more about it here. 

Tricolor Holdings’ collapse summarizes the challenges Americans have had. For years, Americans stretched their budgets to drive new cars, encouraged by lenders offering long loan terms and sky-high interest rates. 

The problem is that getting a car has become more expensive and faster than anyone expected. 

As a result, total auto loan debt now sits at a staggering $1.66 trillion—higher than credit card debt. Monthly payments average $745, and nearly one in five borrowers pays over $1,000 a month.

For reference, the average car payment was around $550 in 2019, which is 35% less than the current average. Here’s more on how it has changed. 

There was some form of relief during June and July of 2025, but not for everyone. This article explains how only buyers with good credit scores saw a benefit. 

Meanwhile, the strain on others is starting to show. Delinquencies have surged to levels not seen since before the 2008 financial crisis, and it’s not just risky subprime borrowers. 

Even some “prime” borrowers—those with solid credit scores—are falling behind on their loans at double the rate they were pre-pandemic. 

This article presents an in-depth analysis of the situation, using detailed graphics to highlight how similar today is to the days before the 2008 crisis.

The comparison to 2008 isn’t just alarmist talk. Auto lloan defaults are now worse than during the financial meltdown. 

Repossessions jumped 43% between 2022 and 2024. Auto loan delinquencies reached record numbers, as this article explains. 

With consumers prioritizing car payments over other essentials, some economists see this as a red flag for the broader economy. If Americans can’t keep their cars, it signals deeper trouble with household finances. 

The problem is that this could trigger a domino effect. Fewer lenders are willing to take on risk, leading to higher rates for borrowers and a slowdown in car sales that would ripple through the entire auto industry, as this article explains. 

This news comes at a challenging time for automakers. Rising manufacturing costs and supply issues have impacted their production, and consumer confidence is shaky. Lenders might tighten their requirements and stop lending to many prospective buyers. 

So, what happens next? If history is any guide, lenders will tighten standards, car sales will dip, and repossessions will climb. 

Policymakers may be forced to step in. The question is whether they will step in earlier or later. 

If you’re a prospective car buyer, now would be the time to proceed with extreme caution. Now is not the time to take on a six-year loan at 8% interest for a vehicle that depreciates the moment it leaves the lot. 

The auto loan bubble may not pop overnight, but the cracks are widening. It’s up to us to ignore the lesson from 2008: when easy credit dries up, it’s the average American family left holding the bag and lots holding the cars.