Lenders often charge interest exceeding 20% and package these loans into bonds for investors, who continue to see returns despite borrower defaults. Approximately 25% of car buyers now use seven year loans for vehicles that lose half their value within three years, with average monthly payments between $748 and $772. With the 10 year Treasury yield at 5.29%, borrowing costs remain elevated as the market enters the October to January window when delinquencies traditionally climb fastest.
Tuesday, October 20, 2026
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Subprime Auto Delinquencies Reach 32 Year High of 6.9%
US Markets19 days ago
Borrowers with poor credit ratings are facing total vehicle loss while remaining fully indebted, a finding from Bloomberg's study of 3 million loan accounts. People with credit scores below 570 typically experience rapid repossession or receive multiple loan modifications that add thousands in fees and interest, meaning they owe nearly the original loan balance after losing the car. Delinquency rates reached 6.9% in January, the highest in 32 years, before dipping to 5.49% and rising to 6.13% by July.
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