Auto loan delinquency rates surge as more Americans fall behind on car payments, student debt pressures add strain
Nationwide auto loan delinquencies hit their highest levels since 2010 as 5.0% of auto debt is over 90 days late in Q2 2025, driven by larger balances, longer terms and the restart of student loan payments.
Key takeaways
- Late-stage delinquencies rose: 5.0% of outstanding auto debt was 90+ days late in Q2 2025, a 12.6% increase year-over-year, according to LendingTree.
- Early signs of stress: 8.0% of auto loans were 30 days past due in Q2 2025 (LendingTree).
- Student loan restart matters: The resumption of federal student loan repayments has added pressure and helped drive late-stage delinquencies higher (VantageScore).
- Local impact: Communities like Walla Walla may see tighter household budgets, reduced local spending and calls for community-based solutions.
Key information
- As of Q2 2025, 5.0% of outstanding auto debt was at least 90 days late — a 12.6% increase from Q2 2024 (LendingTree).
- Early-stage delinquencies: 8.0% of auto loans were 30 days past due in Q2 2025 (LendingTree).
- Average auto loan balances rose by more than $400 year over year as of February 2025 (VantageScore).
- Average loan terms have stretched to nearly six years — 68.9 months for new cars and 67.2 months for used cars (LendingTree).
- The restart of federal student loan repayments has added monthly obligations and helped drive late-stage delinquencies higher (VantageScore).
- Average VantageScore credit score slipped to 701 in February 2025, down from 702; VantageScore EVP Susan Fahy linked the decline to larger car loan balances and student debt burdens (VantageScore).
- Lending remains concentrated among prime borrowers (scores 661+ make up ~70% of retail financing), while borrowers with scores ≤600 account for ~15% (LendingTree).
- Banks hold the largest share of auto lending at 29.9%, credit unions 23.9%, captive lenders 18.6%; buy-here, pay-here dealers can capture up to 15.9% of used-car financing and often charge much higher interest (LendingTree).
Why delinquencies are rising
Rising balances: Average loan balances increased by more than $400 year-over-year, adding pressure to monthly budgets (VantageScore).
Longer terms: Buyers are stretching terms to nearly six years to keep monthly payments lower — a short-term fix that increases interest exposure and vulnerability if income falls (LendingTree).
Student debt pressures: The resumption of federal student loan repayments in 2024–25 created new monthly obligations, and VantageScore found that student loan credit reporting drove much of the increase in late-stage delinquencies (VantageScore).
Economic backdrop: High interest rates, higher vehicle prices and limited wage growth make it harder for households to catch up; reporters at NBC Palm Springs and others note these macro factors are contributing to the national uptick.
How delinquencies are measured and what the numbers mean
Different trackers use different methods, but the broad trend is consistent: more borrowers are missing payments. LendingTree reported that 5.0% of auto debt was 90+ days delinquent in Q2 2025 — approaching the 5.3% peak seen in late 2010 after the 2008 crisis (LendingTree).
Early-stage delinquencies (30 days late) are an early warning sign: an 8.0% 30-day delinquency rate suggests stress could migrate into 60- and 90-day categories if incomes don’t rise or costs don’t ease (LendingTree).
VantageScore’s CreditGauge also showed increases in late-stage delinquencies in early 2025, with month-over-month growth noted in February (VantageScore).
Who is most at risk
Delinquencies are not confined to subprime borrowers. While subprime buyers face higher interest and predatory risks, a large share of retail loans go to prime and super-prime borrowers — indicating that rising costs and renewed obligations (like student repayment) are pushing even relatively creditworthy households toward delinquency (LendingTree).
Buy-here, pay-here lenders remain a concern: they often serve borrowers with limited options and charge higher rates and fees, increasing the chance of falling behind (LendingTree).
Credit scores and credit health
VantageScore reported the average VantageScore slipped to 701 in February 2025; Susan Fahy of VantageScore tied the drop to bigger car loan balances and renewed student loan payments.
“Falling behind on car payments can lower credit scores, raise future borrowing costs and increase the risk of repossession — with ripple effects on employment and housing options,” financial analysts warn.
Implications for Walla Walla, Washington
Walla Walla’s mixed local economy — agriculture, small manufacturing, services and tourism — depends on reliable transportation. Rising auto loan delinquencies threaten household budgets and could reduce consumer spending at local shops, wineries, restaurants and service businesses.
Local lenders and credit unions: Credit unions hold nearly a quarter of national auto lending; in Walla Walla, community lenders often offer more flexible terms and lower fees than buy-here, pay-here operations, making them a practical refinancing or hardship option (LendingTree).
Household budgets: Seasonal farm work, hospitality jobs and small-business income in the valley mean many households are vulnerable to student loan repayment pressures if younger members or parents resume federal loan payments (VantageScore).
Political consequences: Rising delinquency can become a political issue, with conservative voters likely to push for financial education, credit union outreach and stricter oversight of predatory buy-here, pay-here practices.
Practical steps for Walla Walla drivers
- Contact your lender early: Banks and credit unions often offer hardship programs or temporary adjustments; local lenders may prefer working out solutions to defaults (LendingTree).
- Avoid buy-here, pay-here unless necessary: These contracts can carry much higher interest and fees and worsen delinquency risk (LendingTree).
- Consider refinancing: Credit unions or community banks may offer lower rates or better terms to reduce total interest costs (LendingTree).
- Reassess budgets: Factor in student loan repayments and prioritize bills to avoid cascading delinquencies (VantageScore).
- Build a rainy-day fund: Even small savings can prevent short-term income shocks from becoming long-term delinquencies.
Reporting and sources
This article draws on LendingTree’s auto debt statistics and VantageScore’s CreditGauge report for 2025, which track delinquency trends, balances, term lengths and credit scores. Additional context was reported by NBC Palm Springs.
