Auto Debt Reaches $1.71 Trillion; Average New-Car Loan Hits Record $42,500

Americans owed $1.71 trillion on auto loans and leases at the end of June, up $28 billion from March and $58 billion from a year earlier, the New York Fed reported Wednesday using Equifax data. The 3.5% annual increase in balances came as the average amount financed for new vehicles hit a record $42,500.

That record reflects a shift in what automakers build. Ford and its legacy peers have largely abandoned sedans in favor of luxury pickup trucks and SUVs that can top $100,000. The strategy has pushed the ticket price on every new vehicle leaving the lot. Loan lengths have not stretched to absorb the cost. The average new-car loan ran 66.5 months in Q2, roughly where it stood a decade ago and shorter than the pandemic peaks.

Unit sales have never returned to pre-2019 levels. The balance growth comes from price, not volume, and from a customer base willing to finance a $50,000-plus vehicle at current rates.

The credit-quality picture is mixed. Borrowers with scores of 720 or higher accounted for 54.6% of new auto loans and leases in Q2. That share was down from last year's record 56.1%. It remained near the top of the historical range. The subprime share hit an all-time low of 15.0% in the fourth quarter of last year and ticked back to 15.6% in Q2.

Subprime in this context means a credit score below 620, reflecting a history of missed payments or defaults. Subprime auto lending is a specialized business. Dealer-lenders originate the loans and securitize them, selling the bonds to pension funds and insurance companies. The interest rates and upfront margins are high enough to absorb substantial default rates. Every few years, a subprime specialist implodes under fraud or credit losses. Most recently, Tricolor collapsed under a cascade of fraud allegations, leaving holders of its ABS bonds scrambling.

Auto loan balances as a share of household disposable income stood at 7.25% in Q2, roughly the middle of the range the ratio has traced for two decades. Disposable income, as measured by the Bureau of Economic Analysis, includes after-tax wages, interest, dividends, rental income, farm income, small business income, and government transfers. Capital gains are excluded, which means the income measure understates the resources of wealthy households. The ratio has oscillated between roughly 6.5% and 8% since the early 2000s. The current level does not signal aggregate stress. It leaves little room for a further leg up in vehicle prices without borrowers taking on more leverage.

The 60-plus-day delinquency rate on all auto loans stood at 1.42% in June, down 2 basis points from a year earlier, according to Equifax. That rate is up from the ultra-low levels of 2020 and 2021, when stimulus payments and loan forbearance suppressed delinquencies across all credit tiers. The data does not go back far enough to compare to pre-pandemic norms.

The subprime segment tells a different story. The 60-day-plus delinquency rate on subprime auto ABS hit 6.90% in January 2026, a record for that month and up 34 basis points from the prior January, according to Fitch Ratings. By June, the rate had improved to 5.67%, down 64 basis points year-over-year. The improvement reflects the washout of Tricolor and other troubled originators from the securitization pipeline, Fitch analysts said.

Prime auto ABS, by contrast, showed a 60-day delinquency rate of just 0.37% in June. That reading has barely budged in years. The divergence between prime and subprime performance shows that consumers with good credit are current on their car payments, while a subset of subprime borrowers, concentrated at a few failed lenders, is not.