Auto loans are the fastest-growing problem area in American household debt. Balances hit a record $1.713 trillion in the second quarter of 2026, and the share of balances seriously behind on payments is now the highest in the last 23 years.
New auto loans also hit a nominal all-time high of $211 billion in Q2 2026, exceeding the roughly $200 billion quarterly pace of the 2021 post-pandemic surge. Subprime auto delinquency hit a 32-year high in January 2026. Auto loans are growing faster, getting made faster, and going bad faster than almost any other kind of household debt.
A deep dive from The Kaplan Group analyzes why that combination makes auto loans the debt story to watch in 2026.
Key Takeaways
- Auto loan balances reached a record $1.713 trillion in Q2 2026, up $28 billion in one quarter.
- New auto loan originations hit a nominal record $210.8 billion in Q2 2026, up from $182.1 billion in Q1.
- 5.49% of auto loan balances were at least 90 days past due, above the 5.27% peak in 2010.
- The mix shifted toward risk: sub-620 borrowers took 16.1% of new volume in Q2, up from 15.6% in Q1.
Balances Are Rising Everywhere, But Auto Loans Are Rising Faster
Since Q1 2025, mortgage balances grew 2.4%, student loans grew 1.2%, and credit cards grew 6.9%. Auto loans grew 4.3% in that same span, faster than both mortgages and student loans, even though auto debt is a smaller slice of the $18.77 trillion total than mortgages.
Since Q2 2003, auto loan balances jumped from $0.622 trillion to $1.713 trillion, a 175% increase. This is a bigger jump than mortgages saw over the same 23 years. Auto debt now makes up about 9.1% of all household debt. Mortgages still lead at 69.9%.
Auto loan balances fell from $0.81T in 2008 to $0.70T in 2010, then rose steadily to a record $1.713T in Q2 2026.Indexed to 2003, the shape is easier to read: auto debt has grown more than two and a half times in 23 years, and the only sustained pullback in that entire span came between 2008 and 2010.
The speed of the change shows up most clearly in new lending. Volume rose from $166 billion in Q1 2025 to $182 billion in Q1 2026, then jumped to a record $211 billion in Q2 2026. This is roughly a 16% jump in one quarter.
Late Payments At A New High
The clearest sign of trouble is not how much people owe. It is how many are falling behind. In Q2 2026, 5.49% of all auto loan balances were 90 or more days late, close to the 5.60% rate in Q1 2026 and well above the 4.41% rate from Q1 2024.
Auto 90+ day delinquency peaked at 5.27% in Q4 2010, fell to about 3.1% by 2013, and rose to an all-time high of 5.60% in Q1 2026 before easing to 5.49% in Q2 2026.
Q1 2026’s 5.60% is the highest reading in the New York Fed’s series, and Q2’s 5.49% remains above the 5.27% recorded in Q4 2010. That comparison is troubling because unemployment today sits at 4.1%, far below the roughly 9.5% rate that prevailed in late 2010. People are falling behind on car payments at rates worse than the last crisis, even though jobs are easier to find than they were then.
Subprime At Risk
The subprime segment is in the worst shape. Fitch Ratings found that 60-plus-day late payments on subprime auto loans hit 6.90% in January 2026, the highest rate in 32 years. The rate has improved since: subprime delinquency was 5.67% in June 2026, down 64 basis points year over year.
Subprime borrowers hold just 17% of all active auto loan accounts, yet they account for nearly two-thirds of all delinquent loans, according to Federal Reserve Bank of Philadelphia research. The Philadelphia Fed measures loan counts rather than dollar balances, and uses a 60-day threshold for severe delinquency.
Trouble is heavily concentrated in a small slice of borrowers. Repossessions back this up: about 1.73 million vehicles were repossessed in 2024, the most since 2009, and industry trackers projected volumes could top 3 million by the end of 2025. Cox Automotive’s own estimates are more conservative, at roughly 1.7 million for 2025 and 1.8 million annually from 2026 through 2029.
Nonetheless, the pace of new borrowers slipping into severe delinquency has stayed fairly steady. The high overall rate instead comes from a buildup of borrowers who fell behind in earlier quarters and have not yet had their loans resolved through repossession or write-off. A backlog like this clears slowly, so auto delinquency could stay elevated for a while even if the rate of new borrowers falling behind does not worsen.
Younger Borrowers Are Carrying The Strain
Delinquency is not evenly distributed by age. In Q2 2026, 4.83% of auto balances held by borrowers aged 18 to 29 transitioned into serious delinquency, against 1.77% for borrowers aged 60 to 69, a gap of nearly three to one. Borrowers in their thirties are at 3.91%, close to their highest level on record.
Why Auto Loans Are Souring Faster Than Other Debt
| Debt type | Q2 2026 balance | Growth since Q1 2025 | 90+ days late | What backs the loan |
| Mortgages | $13.117T | +2.4% | 0.99% | A home |
| Auto loans | $1.713T | +4.3% | 5.49% | A car that loses value |
| Credit cards | $1.263T | +6.9% | 12.92% | Nothing |
| Student loans | $1.651T | +1.2% | 10.60% | Nothing |
Note on student loans: this figure is not comparable to the others. Reported student loan delinquency fell to 0.49% in Q4 2024 during the payment pause, then jumped to 7.74% in Q1 2025 as delinquency reporting resumed. The 10.60% reading reflects the surfacing of pre-existing defaults, not a fresh wave of borrowers falling behind.
Auto loans are backed by a real object, so lenders can eventually repossess it instead of writing off the loss. But that also means a late loan often sits unresolved during the repossession process, rather than clearing quickly the way an unsecured debt might. The real driver is cost, not a sudden unwillingness to pay.
The average new car now costs roughly $49,200 to $49,900, with July 2026’s $49,855 the highest reading of the year and September 2025’s $50,080 the all-time record. Tariffs have added an estimated $1,600 to $2,000 to the price of vehicles built in the US and $5,000 to $8,900 to imported vehicles. Average monthly payments on new-car loans reached $770 in Q1 2026, up from $748 a year earlier, and nearly one in five new-car buyers now pays over $1,000 a month.
To make those payments fit, buyers are stretching out loans. The average new-car loan runs 69.48 months and the average used-car loan 67.73 months, with more than a third of new-vehicle loans (35.55%) now exceeding six years, up from 30.83% a year earlier. Terms beyond 85 months remain a small slice, at 3.33%. Longer loans mean more years of owing more than the car is worth.
Rising Prices Are Squeezing Buyers Unevenly
Affordability has worsened for almost everyone except the wealthiest buyers. The share of new-car buyers earning under $100,000 a year dropped from 50% in 2020 to 37% in 2025, while the share earning over $200,000 rose from 18% to 29%.
Lower-income buyers are being pushed toward used cars, longer loans, or out of the new-car market entirely. It now takes about 35.3 weeks of the median household’s income to buy a new car, up from 33.7 weeks a decade ago in 2016, and down from a peak of 42.2 weeks in December 2022. As recently as 2024, a few new cars were still available under $20,000. By early 2026, none were, after models like the Nissan Versa and Mitsubishi Mirage were discontinued.
This squeeze feeds directly into delinquency. Higher prices push more borderline buyers into subprime loans or longer terms just to make payments work, raising the odds they will owe more than the car is worth if they need to sell or trade in. Rising repair and maintenance costs add to the strain, forcing some families to choose between fixing a car and making a loan payment.
Could Auto Loans Be The Next Subprime Crisis?
It is too early to call auto loans the next subprime crisis. The market is smaller, and lenders can repossess a car more easily than they can foreclose on a home. Still, the warning signs are growing: balances reached a record $1.713 trillion, new lending hit a nominal record $211 billion, and 5.49% of balances were at least 90 days late.
The problem is not only that borrowers owe more. Cars cost more, monthly payments are higher, and loan terms are getting longer. Many people now owe more than their vehicle is worth. If they lose income, face a major repair bill, or fall behind on other expenses, a missed car payment can quickly lead to repossession, and losing a car makes it harder to get to work.
For debt collectors, this could mean more difficult accounts and longer recovery timelines. A car can be repossessed, but the borrower may still owe a deficiency balance after it is sold. Payment plans may not work if the borrower is already underwater. Auto debt may not become a full-scale financial crisis like subprime mortgages did, but it is becoming a serious subprime collection risk.
Sources
- Federal Reserve Bank of New York, Quarterly Report on Household Debt and Credit: Q2 2026. Total household debt; auto, mortgage, credit-card and student-loan balances; originations by credit score; transition rates into serious delinquency; 90-plus-day delinquency rates; delinquency transitions by age. Underlying data workbook, pages 3, 8, 12, 14 and 26. Draws on the New York Fed Consumer Credit Panel/Equifax.
- Federal Reserve Bank of Philadelphia, Consumer Finance Institute, “Do recent auto loan delinquency rates overstate borrower distress?” Source for the finding that severe auto delinquency (60-plus days) is rising largely because delinquent loans remain unresolved longer, and that subprime borrowers account for nearly two-thirds of delinquent auto loans while holding 17% of active accounts.
- Fitch Ratings subprime and prime auto ABS indices, as reported by Wolf Street, Auto Remarketing, Auto Finance News and CarEdge. Source for 60-plus-day subprime delinquency of 6.90% in January 2026 (a 32-year high) easing to 5.67% in June, and prime delinquency of 0.37% in June.
- Experian, State of the Automotive Finance Market Report: Q1 2026. Average loan terms of 69.48 months (new) and 67.73 months (used); the 35.55% share of new loans exceeding six years; the 3.33% share exceeding 85 months; average new-car payments of $770.
- Cox Automotive and Kelley Blue Book. Average transaction prices; the Cox Automotive/Moody’s Analytics Vehicle Affordability Index; buyer-income shares; repossession volumes; the shrinking supply of low-cost new cars.
- U.S. Bureau of Labor Statistics, Employment Situation, July 2026. Current unemployment rate of 4.1%.