Here is the latest problem that the Trump administration has to deal with.
Americans are facing significant financial strain, with a record number of people missing their car payments. According to data from Fitch Ratings, 6.56% of subprime auto borrowers were at around 60 days behind on their car loans in January. This is the highest delinquency rate since Fitch began tracking this data in 1994, underscoring the growing challenges that many households are grappling with.
The financial burden is being felt nationwide as both car prices and interest rates continue to rise. The Federal Reserve Bank of New York also reports an increase in serious auto loan delinquencies, which are loans 90 days or more past due. In the last quarter of 2024, the share of auto loans in serious delinquency reached 3%, marking the highest rate since 2010. According to researchers at the Fed, this rise is largely due to the combination of higher car prices and the rising cost of financing. For many borrowers, monthly payments have become simply unaffordable.
Since the pandemic began, the price of a new car has jumped by over $10,000, going from an average of about $38,000 in January 2020 to more than $48,500 in January 2025, according to data from Cox Automotive. With higher interest rates, financing a new car has become more expensive, pushing monthly payments higher. The average new car payment in January 2025 reached $755, still significantly above the $566 average monthly payment just a few years ago in 2019.
If former President Trump’s proposed tariffs on foreign cars are enacted, the situation could worsen. Some analysts suggest the new 25% tariffs could add as much as $12,000 to the cost of a new vehicle, especially if they impact imports from Mexico and Canada, which are key U.S. trading partners.
Even prime borrowers, those with better credit scores, are feeling the effects. Fitch reports that 0.39% of prime borrowers were nearly 60 days over due on their car loans in January, slightly up from the previous year. While those with stronger credit may be in a better position than subprime borrowers, the overall increase in delinquencies shows the widespread impact of rising costs on car buyers across the country.