Money MoveAuto Loan Delinquencies Hit a 32-Year Record. Should You Be Worried?
CarEdge's latest video claims auto loan delinquencies have hit a 32-year record. That's a scary headline. But before you panic about the state of car financing in America, let's ask the questions that actually matter.
Our Take
The numbers are real, but the story is more nuanced than "the sky is falling." Subprime auto loan delinquencies have climbed to levels not seen since the mid-1990s. That's concerning. But this isn't a broad consumer crisis. It's a concentrated problem hitting a specific group of borrowers who were set up to fail by aggressive lending practices. The average car owner with decent credit? They're doing fine. The question isn't whether there's a problem. It's who created it, who's suffering, and what you can do about it.
The Questions We'd Ask
1. Are delinquencies actually at a 32-year high, or is that cherry-picked?
It's real, but with context. According to Fitch Ratings, subprime auto loan delinquencies (60+ days past due) hit 6.9% in January 2026. That is the highest since 1994. But this is specifically the subprime segment. The overall auto loan delinquency rate sits at about 1.61% according to Equifax, which is elevated compared to pandemic-era lows but not catastrophic by historical standards.
The 1994 comparison is also worth examining. That period followed the 1990 to 1991 recession, with elevated subprime stress that eventually normalized without a broader crisis. Today's conditions are different: vehicle prices are significantly higher, and loan terms have stretched far beyond what existed 30 years ago.
2. How did we get here? Is it really the dealers' fault?
CarEdge points the finger at dealers and finance managers maximizing their compensation by pushing longer loan terms. There's truth to that, but it's a systemic issue, not just a dealership problem.
The numbers tell the story. Independent finance companies now average 139% loan-to-value ratios on used cars. Credit unions average 128%. The share of used car loans with LTV ratios above 140% nearly doubled from 17% in mid-2022 to 31% in mid-2025. That means nearly a third of used car borrowers owe dramatically more than their vehicle is worth the moment they drive off the lot.
Average post-refinance loan terms have ballooned to 90.57 months, over 7.5 years, according to Experian data. When you finance a depreciating asset for that long at those LTV ratios, you're almost guaranteed to be underwater for years.
3. Is this actually a crisis for you, or just for a specific group?
This is the critical question the video doesn't fully unpack. The delinquency spike is concentrated almost entirely in the subprime tier. Borrowers with credit scores above 760 are seeing average rates of 5.5% on new cars and 7.0% on used cars. They're not the ones falling behind.
The borrowers in trouble are those who were approved for loans they arguably shouldn't have qualified for, at LTV ratios that made negative equity inevitable from day one. TransUnion data shows the sharpest delinquency increases in the 2024 and 2025 loan vintages, specifically in subprime tiers.
This is a class problem, not a market-wide meltdown. And that distinction matters when you're deciding whether to worry about your own financial position.
4. What about those 120-month loans? Are those really a thing?
Yes. Loan terms of 84, 96, and even 120 months exist in the market today. While there isn't direct data comparing default rates by term length, the logic is straightforward: the longer your loan, the more time you spend owing more than your car is worth. A 10-year loan on a vehicle that loses 60% of its value in the first five years is a recipe for negative equity.
The real danger isn't the monthly payment. It's being trapped. If your circumstances change and you need to sell or trade in, you're stuck covering thousands in negative equity. That's the hidden cost of a "low monthly payment."
5. Should you actually be worried?
If you have good credit and a reasonable loan term, probably not. Prime borrowers are performing normally. The system is working for them.
If you're in the subprime category, or if you took on an extended loan term to afford a vehicle that was really outside your budget, pay attention. Know your payoff amount versus your car's current value. If there's a gap, start planning now rather than waiting until you're forced to act.
The Bottom Line
CarEdge isn't wrong about the headline numbers. Subprime auto delinquencies are at levels we haven't seen in three decades. But the framing matters. This isn't 2008 for car loans. It's a concentrated crisis born from years of aggressive lending, inflated vehicle prices, and loan structures that prioritize monthly affordability over long-term financial health.
The real takeaway? Be thoughtful about your car financing. Know your LTV. Understand what your loan term actually costs you. And if you're already in a tough spot, explore refinancing options before things get worse.
That's what Sidekick is here for. We help you see through the noise and find the moves that actually save you money.