The auto finance industry is in trouble. Subprime car loan delinquencies just hit 6.56%—the highest level ever recorded. That’s not just a bad month. That’s a flashing red warning sign that borrowers are drowning in debt and running out of options.
Companies like Carvana, DriveTime, and Westlake Financial are seeing default rates spike across the board. It’s not just subprime borrowers struggling either—even prime customers are starting to fall behind on payments. That’s when you know things are breaking down.
And here’s where it gets worse. Lenders don’t even want the cars back. Normally, when borrowers can’t pay, banks repossess the vehicles and resell them. Not this time. Instead, they’re handing out loan extensions, pushing payments further into the future, and hoping people can catch up. Because deep down, they know the truth—if they start seizing cars, the used car market could collapse, and those assets might not be worth what they once were.
This isn’t just a blip. This is the consequence of years of easy credit, skyrocketing car prices, and consumers stretched too thin. The auto loan bubble is bursting, and the industry is scrambling to cover the damage.
"New data says car loan defaults just hit the highest-ever recorded"
"According to S&P Global Mobility, in December, 60-day-plus delinquencies rose to 6.56% of all subprime car loans.
That’s the highest ever recorded……What’s more, institutions are starting to feel that… pic.twitter.com/Djndp44qsk
— kristen shaughnessy (@kshaughnessy2) March 1, 2025
Sources:
https://www.motorbiscuit.com/new-data-subprime-car-loan-defaults-record-high/
https://www.foxbusiness.com/lifestyle/americans-falling-behind-car-payments