Auto debt hit $1.71 trillion this spring, and every few months somebody calls that a crash. It isn’t one. The data shows something slower, and for the people actually making the payments, in some ways worse.
The New York Fed’s Q2 2026 household report shows auto loan balances increased by $28 billion to $1.71 trillion, and auto loan originations picked up with $211 billion in new auto loans appearing this quarter. Lenders aren’t running for the exits. They’re still writing paper.
Where the late payments actually are
The stress shows up at the edges, not the center. The Fed’s data puts the share of auto balances newly sliding into serious (90+ day) delinquency at 3.00% in Q2 2026, versus 2.93% a year earlier. That’s a creep, not a cliff. Joelle Scally, an economic policy advisor at the New York Fed, said: “new delinquencies for auto loans and credit cards remain at elevated levels.”
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TransUnion’s Q2 auto report agrees. Accounts 60 or more days late rose just 0.02 points from a year earlier, to 1.33%. The damage is mostly in used cars. Used-car delinquencies rose twice as fast as new ones (0.14 points vs. 0.07), and the riskier the borrower, the worse recent used-car loans are performing.
So the market as a whole is holding up. The pain is concentrated among people who bought used cars with weak credit.
The math that should worry owners
The real problem is how the deals are built. On TransUnion’s numbers, the average new-car payment reached $785 and the average used-car payment $544, with 44% of new payments above $750 and 50% of used above $500. Loan terms are stretching too: vehicles financed for 84+ months increased slightly year over year for both new and used.
The loan-to-value ratio compares the loan to what the car is worth, and it is the number buyers should care about most. TransUnion says used-car LTVs remain elevated, and the share of used loans written at 140% or more of the car’s value rose from a year ago. A lot of people are borrowing far more than the car is worth on the day they buy it. Some of that extra comes from rolled-over balances on old loans, and some comes from add-ons like extended warranties.
Picture a seven-year loan on a five-year-old crossover. The loan isn’t paid off until the car is about twelve. By then it may need timing components, a water pump, struts and a pile of other old-car repairs, and the owner will still be making payments. By then the owner may be paying the mechanic and the lender in the same month, for the same old car.
When an underwater car gets totaled
Negative equity turns a crash into a money problem as well as a car problem. If an underwater car is totaled, the insurer pays what the car is worth, not what you owe. The rest is still your debt. Gap coverage is designed for exactly this situation. Anyone financing above roughly 120% LTV without it is betting a lot on never having a bad day. TransUnion also flags that higher vehicle prices and rising total cost of ownership continue to pressure affordability, and its chart shows insurance, maintenance and fuel costs all rising faster than general inflation since 2019.
If you want a real explosion, look at Tricolor, not the borrowers. Federal prosecutors in Manhattan charged the founder of the subprime car dealer and lender, alleging that by in or about August 2025, Tricolor had pledged approximately $2.2 billion of collateral to lenders and investors, but Tricolor had only approximately $1.4 billion of real collateral. Those are allegations, not convictions. But they show where the real risk sits. The alleged problem wasn’t a borrower missing a payment. It was the same car loans pledged more than once and, prosecutors say, about $800 million in collateral that didn’t exist.
If you’re buying now
A “crash” in the style of 2008 would require mass layoffs, and the data doesn’t show that yet. What it does show is a market slowly squeezing its weakest borrowers through long terms, big payments and loans larger than the cars are worth.
If you’re shopping, keep the term at 60 months or less. Put enough money down to stay right-side up on the loan. Get gap coverage from your insurer rather than the finance office, where it usually costs more. And price in the repairs that will come due before the last payment does.
If you bought used in the last two years, how far over the car’s value did your loan start?
Top photo: Alexander Mils on Unsplash.