Car Payment Crisis: The Hidden Struggle of American Drivers
A growing number of Americans are falling behind on their car payments, signaling a deepening financial strain on households already battered by inflation and a shifting job market. This isn’t just about late fees—it’s about livelihoods, mobility, and economic stability.
What’s Driving the Delinquency Spike?
Auto loan delinquencies have surged to alarming levels in 2025. As of Q2, 5.0% of all auto loans were at least 30 days past due—a figure nearing historic highs . But the pain is far worse for lower-income borrowers. Over 6% of subprime auto loans are now more than 60 days delinquent, the highest on record .
This crisis stems from a perfect storm:
- High car prices: Even used vehicles have become unaffordable, with prices up 6.3% year-over-year .
- Longer loan terms: Nearly 1 in 5 new car buyers in early 2025 signed seven-year loans, stretching debt into the future .
- Stagnant wages & job insecurity: Inflation has eroded purchasing power, while layoffs in key sectors have left families vulnerable.
Who’s Most at Risk?
Lower-income Americans—who often rely on subprime loans with higher interest rates—are bearing the brunt. As borrowers with better credit scores flood the used car market, affordable options vanish for those who need them most .
The Ripple Effect: Repossessions and Beyond
The consequences are immediate and severe. Vehicle repossessions surged to 1.73 million in recent months . Losing a car doesn’t just mean losing transportation—it often means losing a job, access to childcare, and the ability to buy groceries.
What Can Be Done?
Experts urge borrowers to act early:
- Contact your lender: Many offer hardship programs or payment deferrals.
- Refinance if possible: Rates have fluctuated—some may qualify for better terms.
- Seek credit counseling: Nonprofits can help negotiate with lenders.
On a systemic level, policymakers are debating stricter lending regulations and support for public transit to reduce car dependency.
