Used Car Dealers NAICS 441120

Oct 15, 2025 - Subprime Auto Loan Delinquencies Hit Record High

• Subprime auto loan delinquencies in 2025 have hit a record of more than 6%, according to Fitch Ratings, as lower-income borrowers struggle to make payments. The percentage of new-car buyers with credit scores below 650 rose to nearly 14% in September, per JD Power, the highest level since 2016. Stagnant wages and rising unemployment have led many consumers to purchase used cars with extended loans, resulting in average monthly payments of $750, with nearly 20% of loans surpassing $1,000 a month. (Not coincidentally, Cox Automotive notes that car repossessions increased to 1.73 million last year, the most since 2009.) Wall Street continues to invest in subprime auto loan-backed bonds despite the risks, citing stricter underwriting standards. Automakers like Ford and General Motors are also adjusting strategies to address the financial strain on consumers, including offering lower rates to risky borrowers and focusing on making more affordable vehicles.
• US auto dealers in 2025 are navigating a complex market with new car prices remaining near record highs, creating affordability challenges for many buyers, per Cox Automotive. In addition, a shortage of used vehicles, particularly those three- to five-years-old, is driving up secondary market prices. This presents both challenges and opportunities for dealers: efficient inventory sourcing is critical, and transparent pricing helps maintain customer trust. High prices and limited supply also make customer education a key differentiator, as buyers increasingly rely on financing options and expert guidance to make informed decisions. In its Q3 2025 forecast, Cox Auto expects 4-8% price increases for both new and used cars throughout the rest of the year. The report expects average tariff costs of $5,500 for all imported vehicles, about $4,900 for Mexican and Canadian imports, and an extra $1,000 for autos assembled in the US due to parts tariffs.

• National banks boosted their share of the auto loan market, writing about 31% of all new vehicle loans in the first half of 2025, according to Experian. It was a 5% year-over-year increase for new cars and a 1% increase for used cars (banks wrote 28% of used vehicle loans in that period). Banks are on pace to write 29% of all US auto loans by the end of the year. Earnings reports of three large banks all show double-digit value growth in auto loans: JPMorgan Chase had a 12% increase in auto loans for H1 2025 ($22 billion); Capital One rose 26% ($20 billion); and Wells Fargo jumped 47% ($11.5 billion). Industry experts attribute the shift to falling interest rates allowing banks to cheaply borrow money to originate auto loans, which they can then offer at lower rates to consumers in an effort to be more competitive.
• Prices for used cars are rising faster than those for new ones, mostly due to a squeeze in supply left over from the pandemic that is further exacerbated by US trade policies. The cost of a used car rose 0.5% from the previous month in July 2025 and was 4.8% higher than the same time last year, according to the monthly inflation report from the US Department of Labor. By comparison, new car prices jumped 0.4% during July. The average price for a 3 year-old car sits at $30,000, per Edmunds. In addition to the pandemic supply problems, more consumers have opted to buy leased cars rather than turn them in after three years. Expired lease trade-ins are historically a major source of used auto supply. Despite the higher prices, used cars might still be viewed as the better deal for consumers than buying new.