More American Families Unable to Keep Up with Auto Loan Payments, Even Surpassing 2008 Financial Crisis Levels.

[PCauto] According to the latest data released by Experian in September 2025, the U.S. auto loan market is facing its sternest challenge since the 2008 financial crisis.

In the second quarter of 2025, the national auto loan delinquency rate (over 60 days past due) reached a historical high of 4.2%, a 1.8 percentage point increase compared to the same period in 2024, indicating that U.S. consumers are under significant financial pressure.

The Current State of U.S. Auto Loan Defaults

From a geographic perspective, Texas, Florida, and Nevada have become the hardest-hit areas in this crisis.

Data from the New York Federal Reserve shows that subprime loan default rates in these regions have exceeded 18%, with an average of 23 out of every 1,000 financed vehicles being repossessed.

This regional disparity is closely related to the employment market conditions and income levels of residents in each state. The volatility of the oil industry in Texas and the slow recovery of the tourism industry in Florida are important contributing factors.

During the 2019-2022 period, used cars, particularly full-size pickup trucks like the Ford F-150 and Chevrolet Silverado, have been most severely impacted.

These models experienced inflated prices during the pandemic due to supply chain constraints. Now, with the market normalizing, their prices have declined by 35% from their peak, leaving many owners in a "negative equity" situation.

In contrast, the default rate for electric vehicles like the Tesla Model 3 is only 1.8%.

The root cause of this crisis can be traced back to the Federal Reserve's monetary policy

The sustained high interest rate policy has pushed the average new car loan interest rate to 7.9%, significantly higher than the 3.8% rate in 2020.

At the same time, the significant price correction in the used car market has caused many car owners' loan balances to exceed the actual value of their vehicles. This "negative equity" situation is spreading across the United States.

According to research by JD Power, approximately 28% of financed vehicles are currently in a negative equity state, with an average discrepancy of $5,200.

Major auto lending institutions like Ally Financial and Capital One have started increasing their bad debt reserves. Ally Financial's Q2 2025 financial report showed that its bad debt reserves increased by 42% year-over-year, reaching $1.23 billion.

Meanwhile, large auction company Manheim reported a 47% year-over-year increase in auction volumes for repossessed vehicles, with three-year-old vehicles accounting for the largest proportion at 38%.

The gravity of this trend has caught the attention of U.S. consumer protection agencies

The U.S. Consumer Financial Protection Bureau (CFPB) reported a 65% surge in related complaints in the first eight months of 2025, with most complaints involving lenders refusing to modify repayment terms.

The non-profit National Consumer Law Center recommends that borrowers prioritize seeking loan modification options rather than voluntarily surrendering their vehicles, as the latter can negatively impact credit scores for up to seven years.

Rising auto loan default rates in the U.S. may signify broader economic issues

Historical data shows that auto loan defaults are often a leading indicator of financial distress among consumers, as most prioritize their car loan payments to ensure commuting capabilities.

The current increase in default rates may indicate that more American households are experiencing financial difficulties.

The impact of this crisis may last until 2026. As more loans issued between 2019 and 2022 enter the later stages of repayment, the risk of default may further increase. Unless the interest rate environment improves significantly or the labor market strengthens notably, the default rate may peak at 4.8% in the first quarter of 2026.