More Americans are falling behind on their auto loans, the Federal Reserve Bank of New York revealed on Thursday, as soaring car prices have eroded their ability to pay their debt.
In the fourth quarter of 2024, serious delinquencies on auto loans — defined as situations where the borrower is at least 90 days past due — rose to 2.96%, according to the New York Fed’s
“While mortgage delinquency rates are similar to pre-pandemic levels, auto loan delinquency transition rates remain elevated,” Wilbert van der Klaauw, an economic research advisor at the New York Fed, said in a statement. “High auto loan delinquency rates are broad-based across credit scores and income levels.”
In a conference call with journalists, New York Fed researchers attributed much of this uptick to car prices, which skyrocketed during the COVID-19 pandemic. From 2020 to 2024, the cost of a new car grew by an average of 4.9% per year, according to the auto services company
“It’s really the high car prices that have increased those payments that people have to make every month,” a New York Fed researcher said during the call. “Those are unusually high, and that translates into these high delinquency rates.”
After the New York Fed released its report, some experts expressed concern over the data.
“The news about auto loan delinquencies is troubling,” Matt Schulz, the chief credit analyst at the online marketplace LendingTree, said in a statement. “Many Americans simply have to have a car to get to work, so that’s often one of the highest priorities when paying bills. If they’re struggling to make those payments, it could be a sign that they’re struggling to make others as well.”
Car loans are only one of the many expenses driving up Americans’ cost of living. As the
However, the New York Fed report’s authors also noted that the COVID-era surge in car prices may be starting to wane. Last month, the average price of a new car fell 0.3% from the previous year, according to the
“As car prices are coming down or stabilizing, we expect that these delinquency rates will also stabilize,” one of the New York Fed researchers said.
Overall, total U.S. household debt reached $18.04 trillion in the fourth quarter. That marked a $93 billion increase from the third quarter, and a $533 billion increase from the final quarter of 2023.
Auto loan balances rose to $1.66 trillion in the fourth quarter — an $11 billion increase from the previous quarter, and a $48 billion jump from one year earlier.
Credit card debt was also elevated, rising to $1.21 trillion in the fourth quarter — up $45 billion from the previous quarter and up $82 billion from the previous year. The serious credit card delinquency rate rose to 7.18% in the fourth quarter, up from 6.36% in the same period one year before.
The New York Fed researchers noted, however, that credit card debt grew even faster in previous years.
“Now things have been normalizing a bit,” one of the researchers said. “This is still elevated compared to the annual growth rates we saw in the five years before the pandemic … but it’s a little bit more normal compared to what we had seen in the last few Decembers.”