Americans are falling behind on car payments at record rates — echoing the warning signs of the 2008 financial crisis.
Nearly 6.6 percent of subprime auto borrowers — those with low credit scores who are considered higher risk — were at least 60 days late on their car loans in January 2025, according to Fitch Ratings.
The rate sat at 2.58 percent as recently as May 2021 before steadily trending higher.
Before the 2008 recession, a surge in defaults on subprime mortgages triggered a financial meltdown.
Now, a similar pattern is emerging in the auto loan market, raising concerns that the US economy could be heading for another downturn.
Buyers are facing higher prices for vehicles, insurance, and repairs at the same time as they’re contending with rising rent and costs at the grocery store.
Meanwhile, President Donald Trump’s trade war with Canada and Mexico looks set to raise the price of new vehicles even more.
The delinquency rate for subprime auto borrowers – the highest since Fitch Ratings began collecting data more than 20 years ago – is another sign that the world’s top economy is tipping toward a recession.
Los Angeles resident Alejandra Graciola is among those struggling to keep up with her car payments.
More Americans than ever before are failing to keep up payments on car purchases

Trump’s trade war with Mexico and Canada could bump up new vehicle prices by $10,000
She bought a $60,000 electric vehicle in 2023 and can’t keep up with her $930 monthly payments.
‘Almost $1,000 for a car is just a little crazy,’ Graciola told CBS News. ‘Now I’m stuck with it.’
Some buyers are also opting for extended repayment plans, so they can make their monthly costs more affordable.
The average cost of a new car has risen to $47,000, and $25,000 for used vehicles.
Borrowing rates also have crept up to more than 9 percent on new cars and almost 14 percent on used cars.
Owners are also getting hit by higher incidental costs of ownership.
Car insurance rates are up 19 percent year over year, while repair and maintenance costs have risen 33 percent since 2020.
Jessica Caldwell, an expert at the auto data firm Edmunds, says buyers show mounting signs of stress in a turbulent economy.
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Los Angeles resident Alejandra Graciola is struggling to keep up with auto payments on her $60,000 electric vehicle
‘People that are in the middle of their loan, they may be hitting the point where the cost of living has gotten to them, and they can no longer make these payments,’ she says.
More signs indicate the US economy is heading for a recession.
US stock markets closed down sharply last week amid mounting uncertainties arising from Trump’s frequently shifting policies, including tariff threats against US trade partners.
Treasury Secretary Scott Bessent said in an NBC News interview on Sunday that there are ‘no guarantees’ the US economy will not experience a recession.
But he ruled out the idea of a financial crisis.
Bessent dismissed fears about recent stock market drops, saying corrections were healthy and that markets ‘will do great’ if the administration puts into place good tax policy, deregulation, and energy security.
In an earlier interview with Fox News, Trump also did not rule out the chance of a recession in the US.
He said his economic policies could cause short-term disruptions but would ultimately lead to prosperity.

Trump says his tariffs could cause short-term disruptions, but refused to rule out the chances of a recession
He’s threatened to slap 25 percent tariffs on goods imported from Canada and Mexico.
That would deal a major blow to the auto industry, whose supply chains extend across US borders into those two countries.
If they come into effect on April 1, new car prices could jump $4,000 to $10,000, estimates from Anderson Economic Group show.
Some battery-powered electric vehicles could see even bigger price spikes.
A recession is a period of economic decline characterized by less production, investment, income, and employment levels.
They are typically defined as two consecutive quarters of economic shrinkage.