U.S. Auto Debt Hits $1.68T as Delinquencies Rise

Outstanding U.S. auto loan and lease balances climbed to $1.68 trillion, and the share of loans and leases past due rose in recent reporting, according to consumer credit data and filings from lenders and credit-monitoring firms.

Lenders and credit-monitoring firms report larger volumes of accounts entering delinquency, concentrated among borrowers with lower credit scores and those carrying loans with extended terms.

The rise in balances reflects continued borrowing for new and used vehicle purchases across the country. The total includes lease balances from both bank-originated contracts and captive finance arms of automakers.

Industry participants and credit analysts point to several factors behind the deterioration in payment performance. Higher interest rates have increased monthly payments for new borrowers and for those with variable-rate deals. Longer loan terms have lowered monthly payments but raised the total cost of credit and the risk of payment stress over time. Wage growth for some households has not kept pace with higher financing costs.

Used-car price volatility has reduced trade-in values, leaving some borrowers with negative equity and limiting refinancing options. Changes in lease returns and in residual-value assumptions have also affected finance company portfolios.

Lenders report tightening underwriting in certain channels and reducing credit access for higher-risk borrowers while continuing to offer better rates to prime borrowers. Originations have shifted toward different term structures, the firms say, and lenders are monitoring payment patterns and adjusting strategies where needed.

Regulators and market observers are tracking delinquency trends because sustained increases can affect bank loan-loss provisions and overall credit market conditions. Consumer advocates and financial counselors advise borrowers who expect difficulty making vehicle payments to contact lenders early to discuss options that can reduce the risk of repossession and further credit damage.