With inflation cutting into the budgets of Americans, a growing percentage of people with auto loans are struggling to make their monthly payments. TransUnion, a leading tracker of financial information, recently reported that the percentage of loans that are at least 60 days delinquent hit 1.65 percent in the third quarter, the highest rate for 60-day delinquencies in more than a decade. The biggest impact is being felt among subprime borrowers who have lower credit scores and often have lower income.

According to Edmunds, an auto research firm, in September, the average transaction price for a new vehicle was $47,138, up almost $2,600 compared to September 2021. The average price paid for a used vehicle was $30,566, a jump of almost $2,500 from the same period in 2021. The rise in delinquencies also follows the end of loan-accommodation programs set up during the pandemic that were designed to help consumers who may have lost their job to avoid having a car repossessed. These programs have delayed delinquencies, which are rearing their heads now. TransUnion cites that approximately 200,000 auto loans that previously took advantage of the pandemic-era accommodation are now listed as 60 days delinquent. About 100,000 accounts that are more than 60 days delinquent remain in accommodation programs.

Despite the rise in delinquencies, market watchers believe the auto loan market remains healthy. TransUnion’s research shows that the average interest rate for a new vehicle loan climbed to 5.2 percent in the third quarter, while the average rate for a used vehicle loan hit 9.7 percent, each up more than 1 percent compared with the year-earlier period. Despite the higher interest rates pressuring many consumers to increase loan terms to at least seven years, delinquency rates have been kept somewhat in check by low unemployment.