Auto loan delinquencies have shifted dramatically, evolving from one of the safest lending categories to one of the riskiest, according to new research from VantageScore. Rising vehicle prices, higher financing costs, elevated interest rates, and sharply increasing insurance and repair expenses are pushing more consumers into financial strain. These affordability pressures—combined with record numbers of borrowers owing more on their vehicles than the cars are worth—have intensified delinquency trends across the market.
VantageScore's study shows that delinquencies have been rising for 15 years and continue to climb across all credit tiers and income groups, even after lenders tightened underwriting standards in 2022 and 2023. The analysis underscores that the issue is not isolated to any one segment of borrowers; rather, the structural affordability challenges are affecting consumers broadly. Despite corrective steps by lenders, losses remain elevated, particularly among Near-Prime and Prime borrowers, offsetting improvements seen in Subprime.
Key findings reveal that auto loans are now among the riskiest commercial credit products, affordability constraints are a primary driver of losses, and recent adjustments to lending criteria have not halted the upward trend in delinquencies. These insights offer lenders a critical perspective on risk management as market conditions continue to evolve.