Subprime Car Buyers Just Broke a 32 Year Payment Record Nobody Wanted to Set

Car prices exploded during the Biden years – and millions of Americans are still paying for it.

A new report now shows exactly how many of those car loans have gone bad.

The number tracking missed payments just hit a point nobody has seen in over three decades.

Subprime Delinquencies Just Hit Their Highest Point Since the Data Began

Fitch tracks subprime auto loans that get bundled into investment securities.

Total auto loan and lease balances climbed to 1.68 trillion dollars in the first quarter of 2026, up more than 40 billion dollars from a year earlier.

In January 2026, 6.9 percent of those subprime loans were more than 60 days past due.

That is the highest level recorded since Fitch started keeping score in January 1994.

February came in at 6.8 percent, still a record for that month.

Prime borrowers are nowhere near this kind of trouble.

Their delinquency rate sits at just 0.42 percent.

Even at the worst of the 2008 financial crisis, prime delinquencies only hit 0.9 percent.

The pain is concentrated entirely on one group: families with weaker credit who got pushed into car loans they could never really carry.

About 15 percent of all outstanding auto loans were subprime or deep subprime when they were written, according to Experian.

Lenders kept approving buyers regardless of the risk.

Wells Fargo reportedly tested loans worth more than 140 percent of a car's value for borrowers with credit scores as low as 500.

Carvana has reportedly approved buyers earning as little as 5,000 dollars a year.

Seventy two, eighty four, and even 96 month loan terms are now common.

Some credit unions are writing 120 month loans – a full decade longer than cars used to be financed.

Negative equity on car loans is sitting at record levels nationwide.

Leasing used to make up roughly a third of new vehicle sales.

It has fallen to under 18 percent, which means fewer drivers are trading in for something newer every few years.

Instead, more of them are stuck.

Tricolor's Collapse Showed Just How Fragile the System Already Is

Dallas based subprime lender Tricolor Holdings filed for bankruptcy liquidation in September 2025.

The collapse left nearly 2 billion dollars in debt on the table, spread across more than 25,000 creditors.

Federal investigators are now examining the company for fraud.

Investigators are looking at whether Tricolor offered identical loan pools as collateral to several banks at once, with each lender believing it alone held the rights.

Fifth Third Bancorp told investors it could be staring down a 200 million dollar loss.

Triumph Financial has already repossessed vehicles off used car lots in Texas tied to those same loans.

America's Car Mart, a used car retailer that leans heavily on subprime buyers, has seen its stock price fall more than 90 percent from its high.

It now trades for around 11 dollars a share.

Tricolor built its business lending to undocumented workers and borrowers with no credit history at all.

It bundled those loans and sold them to investors as securities.

That business model only works as long as borrowers keep paying.

They stopped.

What Four Years of Bidenflation Built Is Now Coming Due

Car prices did not rise by accident.

Joe Biden's 1.9 trillion dollar stimulus bill pumped a flood of cash into an economy already short on new cars.

Prices never came back down.

Interest rates spiked right behind them, and buyers kept signing for cars they could not actually afford.

Lenders like Tricolor were happy to write the loans anyway, because Wall Street was happy to buy the bonds built on top of them.

Nobody who designed that system is the one making the payments now.

Working families are.

A thirty year old with a 580 credit score did not create this mess.

She is the one losing her car over it.

Years of runaway spending built the bubble, and subprime buyers are the ones absorbing the pop.

The Trump administration inherited an auto lending market that was already rotting from the inside.

Fed rate cuts will not save a family already underwater on a car loan.

The real fix is cars people can actually afford to buy outright, not easier ways to finance cars they cannot.

Sources:

• Wolf Richter, "Auto Loan Balances, Debt to Income Ratio, and Delinquencies of Subprime and Prime Auto Loans in Q1 2026," Wolf Street, May 19, 2026.
• CarEdge, "The Auto Loan Crisis Just Hit a 32 Year Record," CarEdge, 2026.
• Bloomberg, "Subprime Lender Tricolor to Liquidate Amid Fraud Allegations," Bloomberg, September 10, 2025.
• AutoGuide, "Subprime Auto Lender Goes Bankrupt, Fraud Alleged, Cars Repossessed," AutoGuide, 2025.