Stop Misreading Auto Data
Auto loan delinquency rates are elevated, that is not in dispute. According to the New York Fed, roughly 5.2% of auto loan balances were 90+ days delinquent as of late 2025, above the long-run average and at levels not seen since the aftermath of the 2008 financial crisis. Policymakers, press, and consumer advocates have attempted to raise an alarm.
The structural pressures are real. Pandemic-era supply chain disruptions pushed vehicle prices sharply higher, and rising interest rates exacerbated the reality of inflating loan balances. Household budgets have tightened amid slowing income growth. Borrowers with lower-incomes and subprime credit have felt these forces most acutely, and credit scores that may have been artificially elevated during 2020–2022 have reverted in ways that affected subsequent vintages.
Yet a closer look at the data reveals something important: the flow of new borrowers falling behind has been stabilizing. The transition rate into early delinquency has declined modestly from its 2024 peak, and transition into serious delinquency has held steady in a narrow range for well over a year.
Researchers at the Federal Reserve Bank of Philadelphia have identified precisely this dynamic in their analysis: the headline auto loan delinquency rate is being driven not by a growing wave of newly distressed borrowers, but by a decline in the rate of exit from delinquency. In short, troubled loans are simply taking longer to resolve through charge-off or repossession.
That distinction has policy implications. The Philly Fed analysts put it plainly: “the headline delinquency rate, taken at face value, likely overstates the degree to which auto borrowers’ financial health is currently deteriorating.” Changes in loss mitigation practices, forbearance, and loan modification efforts – many of them consumer-protective – are a contributing factor. Loans that previously would have resolved quickly are now staying on the books longer, keeping the headline rate elevated even as the underlying pace of new distress moderates.
Repossession data reinforces this picture. A 2025 CFPB study found that more than 99 percent of financed vehicles remained in the borrower’s possession throughout the study period. Even among the highest-risk deep subprime loans, repossession was avoided more than 98 percent of the time on average. Repossession remains, as it has always been, a last resort that lenders pursue only when every other resolution avenue has been exhausted.
None of this is cause for complacency. Delinquency rates remain historically elevated, and 2023 vintage loans bear close watching. But as the Philly Fed researchers caution, analysts and policymakers “should look beyond the headline to distinguish between a market in which more borrowers are falling behind versus one in which troubled loans are taking longer to resolve.” Getting that distinction right is essential to crafting policy responses that serve struggling borrowers, rather than reacting to a number that may be telling only part of the story.
April 16th, 2026
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