More Americans Fall Behind on Auto Loans as Delinquency Rates Rise Past Pre‑Pandemic Levels
American households are facing a growing financial crisis as auto loan delinquency rates surged past pre‑pandemic levels; in Q1 2025, 5.1% of consumers with car loans were delinquent, signaling widespread strain on younger borrowers and Southern states.
Key takeaways
- 5.1% of Americans with auto loans were delinquent in Q1 2025 — LendingTree.
- Delinquency severity: 2.0% 30 days late; 0.9% 60 days late; 0.9% 90–120 days late — LendingTree.
- Late‑stage delinquencies over 90 days rose to 0.45% in Feb. 2025, up 25 basis points month‑over‑month — VantageScore.
- Auto loan balances totaled $1.642 trillion in Q1 2025, a 0.8% drop from the prior quarter — LendingTree.
Main story
Rising delinquencies and who is most affected
New data show auto loan delinquency rates climbing back above levels seen before the COVID‑19 pandemic. According to LendingTree, 5.1% of consumers with auto loans were delinquent in Q1 2025, suggesting the temporary relief many borrowers felt during the pandemic has faded.
Younger borrowers are struggling most. Gen Z borrowers had the highest delinquency rate at 7.5%, followed by millennials at 6.9%, Gen X at 4.3%, and baby boomers at 1.9% — per LendingTree. Analysts note younger people often carry larger relative payments to income and face higher interest costs, making them more vulnerable when budgets tighten.
Geographic patterns: the South is hardest hit
Delinquency rates vary widely by state. Southern states occupy most of the highest‑risk positions: Mississippi led with 9.8% of borrowers delinquent, followed by Louisiana at 8.4% and Georgia at 7.8%. Overall, 14 of the 15 states with the highest delinquency rates were in the South — findings from LendingTree.
The geographic split aligns with monthly payment burdens. The national average monthly car payment is $751. Borrowers in Mississippi, Louisiana and Georgia average $802, $821 and $794 per month respectively; Texas faces the highest average monthly payment at $867, about 15.5% above the U.S. average — LendingTree.
Why delinquencies are rising now
Several economic forces are intersecting to push more people behind on car payments. Lenders and credit analysts point to three main drivers:
- High interest rates — the Federal Reserve’s higher rate environment increases borrowing costs for new and used car loans.
- Higher vehicle prices — the average loan size has risen, reflecting more expensive vehicles and deeper financing needs (VantageScore).
- Stagnant wage growth — when incomes lag rising payments, households are more likely to cut other spending or fall behind.
An NBC report also highlighted that elevated car prices, persistent high rates, and economic uncertainty are making it harder for many Americans to keep up with auto loan payments — see NBC Palm Springs.
Delinquency severity and credit health
Delinquencies are not uniform in severity. LendingTree reports 2.0% of borrowers were 30 days past due, 0.9% were 60 days late, and 0.9% were 90–120 days late. Meanwhile, VantageScore found late‑stage delinquencies (>90 days) rose to 0.45% in Feb. 2025, up 25 basis points month‑over‑month — a concerning signal because longer delinquencies often lead to repossession or charge‑offs.
“Longer delinquencies typically lead to repossession or charge‑offs,” credit analysts warn, as shown by rising late‑stage delinquencies reported by VantageScore.
Credit scores are beginning to show strain: the average VantageScore fell to 701 in February 2025 after holding at 702 for nearly a year. Analysts link the dip to rising auto loan balances and the re‑entry of student loan repayments on credit reports — VantageScore.
A mixed picture on total borrowing
Despite rising delinquencies, total outstanding auto loan balances fell slightly in Q1 2025 to $1.642 trillion, a 0.8% decline from the prior quarter. That small drop — only the second quarterly decline since mid‑2011 — could indicate fewer loans, fewer car purchases, or smaller loan amounts as affordability shifts — data per LendingTree.
Broader economic stakes
Rising car payment defaults can ripple through the economy. Many workers rely on personal vehicles for jobs, and a spike in repossessions or transport insecurity can depress labor mobility and incomes. Financially stressed households may cut spending, slowing retail and services. Lenders could tighten underwriting, reducing demand in the auto market and weighing on growth — implications noted by LendingTree and VantageScore.
Implications for San Diego, California
Economic impact
- Local households: San Diego families may feel the squeeze as higher monthly payments and interest costs reduce disposable income in a region with already high housing and living costs.
- Local car market: Dealers and lenders could see demand shift toward used cars, longer loan terms, or higher down payments; some lenders may tighten credit for marginal borrowers.
Political consequences
- Local officials may face calls for consumer protection measures or expanded financial counseling.
- State policymakers in Sacramento could see pressure for oversight of auto lending practices or support for workforce transportation programs.
Social effects
- Commute and work risk: In a car‑dependent region, losing a vehicle can threaten job stability and incomes.
- Younger residents: Students and early career workers in San Diego mirror national patterns and risk long‑term credit damage.
Cultural relevance
Southern California’s car‑centric culture means that scaling back vehicle quality or losing access to a car affects childcare, daily routines, and community participation.
Practical applications for residents
- Check credit and payments: Monitor credit reports and VantageScores and contact lenders early to explore options that may avoid repossession — see VantageScore.
- Explore local help: San Diego nonprofits and city programs offer financial counseling and transport assistance for loan modification, refinancing, or budgeting support.
- Consider alternatives: Carpooling, public transit, or remote work can reduce dependency on large auto loans while rebuilding stability.
Sources and further reading
- LendingTree, “Auto Loan Delinquency Rates Study,” Q1 2025
- VantageScore, “CreditGauge shows more Americans falling behind on car payments,” Feb. 2025
- NBC Palm Springs, “More Americans falling behind on car payments as auto loan delinquencies surge,” Oct. 13, 2025
Reporting by Times Media Service; sources as cited.
