High car prices and elevated interest rates have strained auto loan borrowers.
Missed payments on auto loans by American car owners rose to the highest level in three decades earlier this year.
The percentage of borrowers with subprime car loans who are at least 60 days past due on their loans increased to 6.56% in January, which was the highest level since data collection began in 1994, according to Fitch Ratings.
The share of 60 days past due subprime auto loan borrowers has remained above 6% since August 2024 after breaking the 6% threshold for the first time early last year. It previously approached the 6% mark in 1996, 2019 and 2023.
The increase in the number of borrowers struggling with auto loans comes as consumers continue to struggle with the impact of the inflationary pressures the U.S. economy has experienced in recent years, which have strained Americans' household budgets. Higher interest rates aimed at bringing inflation down also made new auto loans more expensive for borrowers.
A recent analysis by the Federal Reserve Bank of New York found that auto loan balances have grown steadily since 2011 and increased by $48 billion in 2024 due to an inflow of newly originated auto loans.