Auto loans have gone from the safest consumer credit product to one of the riskiest over the past 15 years, with delinquencies increasing by more than 50%, driven by soaring car prices and rising interest rates, according to a new study.
Consumers across all income groups are struggling to make their monthly car payments, according to VantageScore, a credit reporting company.
Auto loans were once a safe haven, with drivers prioritizing their transportation payments over other debts. But delinquencies on auto loans, defined as being 60 days or more past due, jumped 51.5% between the first quarter of 2010 and the first quarter of 2025. The opposite is true for credit cards, personal loans and most other forms of consumer credit.
The study found that as of July 2025, 1.6% of total auto loans were 60 days or more delinquent, while delinquencies on credit cards and first mortgages are less than 1%. U.S. consumers bought about 16 million new cars last year and the majority were financed. There are nearly 300 million cars on American roads.
VantageScore found that in relative terms, monthly car payments are growing faster than monthly mortgage payments.
“We’re seeing the cost of cars and the cost of owning a car going up tremendously,” Rikard Bandebo, VantageScore’s chief economist, said in an interview. “Over the past five years, this increase has been even faster. »
Since 2019, new car prices have increased by more than 25% and now exceed $50,000 on average, according to researcher Cox Automotive. The average monthly payment for a new car was $767 in the third quarter, and one in five borrowers pay more than $1,000 a month, according to auto researcher Edmunds.com. Interest rates on new car loans now exceed 9%, exacerbating the car affordability crisis.
“It’s a double whammy,” Bandebo said. “You were hit by the increasing cost of the car and then the cost of financing the car.”
No income bracket is immune. “Prime” and “near-prime” borrowers, who generally have good credit scores, are actually missing car payments at a faster rate than at-risk consumers since lenders tightened financing criteria for lower-income borrowers three years ago, the study found.
“The higher your income, the more you tend to think you can own a more expensive car,” Bandebo said.
The average auto loan balance has increased 57% since 2010, outpacing all other credit products, according to VantageScore.
To get a more affordable monthly payment, car buyers are extending loan terms to seven years or more. This leaves a growing number of consumers “backhanded” on their loans, meaning they owe more than the car is worth.
The trend of missing auto payments is unlikely to reverse as U.S. consumers continue to buy more expensive trucks and sport utility vehicles. Automakers are also offering fewer affordable models.
“Consumers are now in a more precarious position than they have been since the last recession,” Bandebo said. “We’ve seen this growing trend over the last few years where more and more consumers are struggling to make ends meet, and it looks like that trend is going to continue into next year.”
