Economists are keeping an eye on what’s getting to be a sizeable uptick in auto loan delinquencies, especially among younger borrowers and borrowers with subprime credit scores, according to the Quarterly Report on Household Debt and Credit from the Federal Reserve Bank of New York for the second quarter of 2025.
“Look at younger people. Segments of our population are having some difficulties,” says one of the authors of the Household Credit report, in a conference call.. “If you look at delinquency rates (for), cars and credit cards, they’re pretty elevated.” (Editor’s note: Protocol for the New York Fed is to avoid quoting individual analysts by name.)
The findings mirror those from TransUnion recently reported in WardsAuto. Overall, demand for auto loans and leases was strong in the second quarter, with the biggest growth in the highest credit-score category, with scores of 760 or higher, the New York Fed reports.
Auto Loan Growth
Total originations for new- and used-car loans and leases in the second quarter were $187.9 billion, up 4.9% year-over-year, the New York Fed says.
The 760-plus category accounted for $75.1 billion in originations, up 14.5% vs. a year ago. That represented a 40% share of auto originations in the second quarter, vs. 36.6% a year ago. Share of originations decreased for all other credit-score categories.
Auto-loan growth was “quite strong” in the second quarter, a New York Fed analyst says. That’s partly because the Q2 numbers included some auto loans and leases that originated toward the end of the first quarter.
Late Notices
That time lag is typical, New York Fed analysts say, but it’s more significant than usual because dealership traffic was heavy at the tail end of the first quarter, as borrowers tried to beat new tariffs on imported autos and auto parts.
Meanwhile, young borrowers and borrowers with subprime risk are a concern, New York Fed analysts say.
Overall, auto loan delinquencies of 90-plus days represented 4.99% of the outstanding balance in the second quarter, up from 4.43% a year ago. After 90 days of delinquency, auto loans are likely to default, New York Fed analysts say.
The youngest age category in the New York Fed statistics, for borrowers 18 to 29, showed 4.58% transitioning to 90 days-plus delinquency in the second quarter. That was the highest share in the study, and an increase from 2.43% a year ago, the New York Fed says.
