The Blubber

American consumers are falling behind on car payments at a pace not seen in three decades.

In January, 6.56% of subprime auto loan holders were at least 60 days late on their payments, according to Fitch Ratings data cited by Bloomberg News on Thursday (March 6). That marks the highest delinquency rate since Fitch began tracking this data in 1994.

“The lower-income segment has taken the hardest hit, and we anticipate that pressure to persist through the year,” said Mike Girard, senior director for North American asset-backed securities at Fitch. He pointed to ongoing challenges from elevated inflation and interest rates as contributing factors.

Girard also noted that payment delays often rise early in the year following the holiday season, but typically improve in March and April as tax refunds arrive.

Fitch categorizes subprime borrowers as those with credit scores of 640 or below. Meanwhile, borrowers with stronger credit are in better shape — just 0.39% of prime borrowers were over 60 days late on payments in January, up slightly from 0.35% a year earlier.

The troubling data comes on the heels of a Federal Reserve Bank of New York report showing that 3% of auto loans were at least 90 days overdue during Q4 — the highest serious delinquency rate for car loans in 14 years.

Even more concerning, credit card delinquencies saw a significant jump, with 11.35% of those loans more than 90 days overdue — up 2 percentage points from the prior quarter and 17% higher year over year.

“We haven’t seen delinquency levels like this since the last quarter of 2011,” PYMNTS noted.

These signs of financial strain come amid weakening consumer confidence and growing economic uncertainty.

“There’s definitely nervousness in the air,” Amias Gerety of QED Investors told PYMNTS' Karen Webster earlier this week. “People are still spending, but there’s more caution, especially with expensive purchases.”

Further highlighting this unease, the most recent Federal Reserve Beige Book used the word “uncertainty” 34 times, reflecting broader concerns around tariffs and reduced consumer spending.