Perspective on Auto Loan Performance
With concern about vehicle loan delinquencies and repossessions at a high level in some corners of Capitol Hill, the latest edition of the Federal Reserve Bank of New York’s Household Debt and Credit Report sheds some new light on the state of the automotive finance market. While there is data of concern, the outlook may be better long-term.
The report, compiled from the New York Fed Consumer Credit Panel, an anonymized sample of credit records drawn from Equifax data, shows that 5.2 percent of the dollar value of all auto loan balances were 90 or more days delinquent in the fourth quarter of 2025. This was an increase from 5 percent in the previous quarter and was the highest share of seriously delinquent balances on record since 2010.
The reasons are well understood. A sharp rise in inflation and interest rates, coupled with pandemic-era supply chain snarls and abundant fiscal stimulus, have left a segment of consumers with loans they are having difficulty paying back in the current environment of reduced employment and income growth.
The good news is that other indicators of credit performance suggest the situation is stabilizing and even improving in some respects. The New York Fed report shows that the percentage of balances transitioning into 30-day delinquency fell to 7.7 percent in the fourth quarter of last year, inching downward from 7.6 percent in the third quarter. More importantly, the rate of transition to early delinquency has fallen for five consecutive quarters as of the end of last year.
At the same time, the percentage of balances transitioning to 90-day delinquency held steady at 3 percent in the fourth quarter. Following a period of increase in 2022 and 2023, transition to serious delinquency has been effectively flat for nearly two years now and stands well below rates recorded in the aftermath of the financial crisis of 2008.
Although affordability issues and household budgetary distress remain top-of-mind, the data bodes well for the near future. Indeed, when surveyed in January, AFSA members offering vehicle finance expect on balance that loan performance will improve in the first half of 2026.
February 25th, 2026
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