NextFin news, Americans are facing growing difficulties in keeping up with car payments, resulting in a sharp increase in vehicle repossessions across the United States, according to reports published in October 2025. The surge in repossessions, which reached an estimated 1.73 million vehicles in 2024, marks the highest level since 2009, highlighting financial strain among many car buyers, particularly those with lower incomes and subprime credit scores.
The trend has been driven by a combination of factors including rising new and used car prices, shrinking incentives from automakers, and longer loan terms taken by consumers to afford vehicles. Since the COVID-19 pandemic, sticker prices have surged, pushing many buyers to opt for used cars and subprime auto loans. However, stagnant wages and a slight uptick in unemployment have made it increasingly difficult for these borrowers to meet their monthly payments.
Data from industry sources such as Cox Automotive and Fitch Ratings reveal that the delinquency rate for subprime auto loans—those with credit scores below 650—has climbed, with more than 6% of these loans being 60 days or more past due in 2025. J.D. Power reported that nearly 14% of new-car buyers in September 2025 had credit scores below 650, the highest proportion since 2016 for that month.
Joelle Scally, an economic policy adviser at the Federal Reserve Bank of New York, explained that many borrowers have stretched their budgets to afford higher-priced vehicles and increased interest rates, contributing to the rise in missed payments and repossessions. Michael Lavin, president and COO of subprime auto-financing firm Consumer Portfolio Services, noted that his company has limited lending amid a doubling of repossessions in the second quarter of 2025 compared to 2022.
The bankruptcy filing of Tricolor Holdings, a lender specializing in customers with little or no credit history, further underscores the financial stress in the subprime auto loan market. Tricolor's collapse, attributed to alleged fraudulent activities and significant losses, affected around 100,000 outstanding loans and raised concerns among investors about the risks associated with lending to vulnerable borrowers.
Despite these challenges, the broader economy remains relatively strong, and Wall Street continues to invest in securities backed by auto loans. However, analysts caution that the rising delinquency and repossession rates signal underlying financial difficulties for many Americans. The situation is compounded by automakers' focus on producing higher-margin trucks and luxury SUVs, which are less affordable for many consumers, while demand for more affordable vehicles remains unmet.
Average monthly payments for new cars have increased to over $750, with nearly 20% of loans and leases exceeding $1,000 per month, placing additional pressure on consumers. The rise in repossessions and loan delinquencies reflects a growing affordability crisis in the U.S. auto market as of late 2025.
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