Auto loan delinquency rates for Gen Z and Millennial car buyers rose slightly in the first quarter of this year, according to TransUnion data, and are higher than those of other age cohorts.
But that isn’t a major cause for concern, a TransUnion analyst tells WardsAuto.
Buyers tend to become better at budgeting as they age and, in any case, they aren’t having trouble obtaining auto loans, TransUnion data shows.
“As people mature (and) learn how to budget (and) probably get paid more, they start to figure out how to use credit better,” says Michele Raneri, vice president and head of U.S. research and consulting at TransUnion.
In the first quarter of 2025, Gen Z and Millennial consumers had 60+ days past due delinquency rates of 1.93% and 1.98%, respectively.
That was down only slightly from the same quarter in 2024 for both cohorts.
By comparison, in Q1 of 2025, Gen X consumers had delinquency rates of 1.42% and Baby Boomers had the lowest at 0.87%.
To be sure, delinquency rates in general have risen since before the Pandemic, Raneri says.
The average for the entire population was 1.56% in the first quarter of 2025, she says. Before the Pandemic, it was around 1.4%.
By 2022, Gen Z's 60+ days past due delinquency rates were 1.57% and Millennials were 1.41%. Gen X was 1.01% and Baby Boomers were 0.63%.
Affordability Rears Its Ugly Head
Standard & Poor’s Global Mobility finds that Gen Z and Millennials buy fewer cars.
The share of new-vehicle registrations by adults aged 18 to 34 fell from 12% in the first quarter of 2021 to 9.9% in the first two quarters of 2025, says S&P Global. During the same period, the proportion of those aged 55 and over increased from 44.8% of new registrations to 48.6%.
There are many contributing factors to the drop in younger buyer registrations, but “the big one” is affordability, including available inventory within an appropriate price range, Jason Jordhamo, marketing director at Polk Automotive Solutions, a product suite within S&P Global Mobility, tells Wards Auto.
The average transaction price for a new vehicle in June was $48,907, up 1.2% compared to the same month in 2024, according to Kelley Blue Book.
That contributes to rising delinquency rates among Gen Z and Millennials, Raneri says.
The increase in the price of new and used vehicles is “putting this generation in a little bit different place than, particularly, older generations, when cars were less expensive,” she says.
Interest rates are also higher, which plays a role in delinquency, Raneri says.
Millennials Spend Big
In the fourth quarter of 2024, the most recent data available, Millennials accounted for the highest new auto loan account balance overall at 33.9% of the total balance of $173.7 billion.
Gen Z accounted for the lowest new account balance at 15.1%.
But Gen Z loan balances were the fastest growing in the first quarter of 2025, at 15.4%, down from the same quarter in 2023.
Millennial loan balances grew by only 1.7% in the first quarter of 2025, slower than in the same quarter in 2024.
Millennial buyers are not only able to obtain auto loans, they are big spenders, according to TransUnion data.
They are buying more expensive cars than any other cohort, thus taking out higher loans, averaging $30,800.
“This is the other side of the coin,” Raneri says. “When (Millennials) are getting loans, lenders are okay with lending more than $30,000.”
A Learning Curve
So, dealers needn’t worry about the ability of Gen Z and Millennials securing loans, Raneri says. “Millennials and Gen Z still have a lot of access to credit,” she says.
And while delinquencies are higher for those two cohorts, that is typical, Raneri says. They learn to manage their credit better as they mature.
“They go through this learning experience and their delinquency rates will go down,” she says.
