More Americans Falling Behind on Car Payments as Auto Loan Delinquencies Rise
A growing share of Americans are falling behind on auto loans, as higher interest rates, rising vehicle prices and stagnant wage growth squeeze households — driving up delinquencies and raising concerns about credit scores and lending markets.
- About 5.1% of Americans with auto loans were delinquent on at least one account in Q1 2025, per LendingTree’s analysis.
- Delinquency rates vary widely by state (roughly 3.2%–9.8%), with several Southern states among the hardest hit — see LendingTree’s study.
- Younger borrowers are driving the rise: Gen Z at 7.5% and millennials at 6.9% (LendingTree).
- Late-stage delinquencies (90+ days) are climbing, nudging down average credit scores and stressing lending markets, according to VantageScore.
Delinquency rates rising across the country
New data show a steady uptick in auto loan delinquencies. As of Q1 2025, about 5.1% of people with an auto loan were behind on at least one payment, according to LendingTree’s analysis.
That national number masks wide state variation. Some states report delinquency rates as low as 3.2%, while others approach 9.8%; the highest rates are concentrated in parts of the Southeast, per LendingTree’s study.
Examples include Mississippi (~9.8%), Louisiana (~8.4%) and Georgia (~7.8%), reflecting local economic and wage differences, according to LendingTree.
Younger borrowers are being squeezed hardest
Age matters. LendingTree reports Gen Z borrowers had a 7.5% delinquency rate in Q1 2025, millennials 6.9%, Gen X 4.3% and baby boomers 1.9% — a clear skew toward younger households (LendingTree).
Analysts tie the pattern to large student debt, lower savings, shorter credit histories and often less-stable incomes for younger borrowers.
When car prices or interest rates rise, younger households often reach delinquency thresholds faster than older cohorts.
Why delinquencies are increasing
Multiple economic forces are converging:
- Higher interest rates: Increased borrowing costs push monthly payments up — a factor local reporting has emphasized (see NBC Palm Springs).
- Elevated vehicle prices: New and used car prices spiked during the pandemic and remain high, increasing loan balances and payments (see VantageScore).
- Stagnant wage growth: Real wages for many households have not kept pace with costs, reducing budget flexibility and increasing default risk (VantageScore CreditGauge analysis).
Late-stage delinquencies and credit impact
Not all late payments are the same. Accounts 90+ days past due are especially consequential — late-stage delinquencies are rising and pressuring overall credit health, according to VantageScore.
VantageScore’s monitoring shows the uptick nudging down the average score (a small decline from 702 to 701), a move that can affect loan pricing and access.
Long-term trend: higher delinquency than before pandemic lows
Auto loan delinquency has risen over the long term. One analysis notes delinquencies climbed by more than 50% in the past 15 years, despite a pandemic-era dip (AOL).
The trend underscores the auto-loan sector’s sensitivity to broader cycles and the reality that borrowers are carrying larger balances than in previous years.
Local reporting and expert views
Local outlets, particularly in California and the Southwest, echo national findings: high rates, rising vehicle prices and slow wage growth are squeezing borrowers (NBC Palm Springs).
Both VantageScore and LendingTree point to growing loan sizes and other household debts as key contributors.
How lenders and borrowers are responding
Lenders are reacting by tightening underwriting, asking for larger down payments or shortening terms to mitigate risk — measures that can limit credit access for stretched borrowers.
Options for borrowers: contact lenders about hardship plans, pursue refinancing if rates fall, or work with credit counselors. Note: refinancing can be harder once credit scores slip, and hardship program availability varies by lender.
Implications for the Inland Empire
The Inland Empire (Riverside and San Bernardino counties) is vulnerable: many residents rely on cars for long commutes, so rising delinquencies could increase repossessions, depress consumer spending and strain local auto dealers and used-car lots.
Possible community responses include expanding financial counseling, consumer protections, transit options and employer transit benefits — actions that could reduce the social and economic toll on younger and lower-income households.
Sources and further reading
- LendingTree — Delinquency Rates Study
- NBC Palm Springs — More Americans falling behind on car payments
- VantageScore — CreditGauge report
- AOL — Auto loan delinquencies over 50% in 15 years
Bottom line: If policymakers, lenders and community groups act now with targeted counseling, protections and transit options, they can reduce harm from rising auto loan delinquencies and help Inland Empire residents keep the cars they need for work and family life.
