More Americans are falling behind on their car payments than ever before, with subprime borrowers feeling the most pain from soaring vehicle prices and higher interest rates.

The share of subprime borrowers at least 60 days past due on their auto notes reached a record 6.65% in October, the highest level since data tracking began in the early 1990s, according to Fitch Ratings.
The crisis reflects the deeper affordability chasm consumers face in the auto market. The average new vehicle price topped $50,000 for the first time, according to Kelley Blue Book; and this trend is likely to accelerate as vehicle retail prices climb by 4% to 8% by the end of 2025 with the arrival of 2026 models to dealerships across the country, according to Cox Automotive. Meanwhile, auto loan interest rates are averaging 7.1% for a 60-month auto loan, according to Bankrate.

If you run into trouble making payments, don’t wait until things become dire, said Sean Tucker, Kelley Blue Book’s managing editor.

“You should contact your lender and let them know that you’re struggling,” Tucker said. “They have programs for that, and generally speaking, they’re going to make more money off helping you make the payments than they are repossessing your car and trying to sell it later.”

Smart shopping tips in a tough auto market

Not sure where to start in your car-shopping journey? Here are some expert tips to score the best deal for your financial situation.

1. Shop for financing before you shop for a vehicle.

Tucker strongly recommends keeping these two processes separate. Having financing offers in hand before choosing a new or used car gives you more leverage in negotiating with a dealer. “It’s a good idea to work with your bank or credit union beforehand, and qualify for what you can qualify for,” he said. “Now, if the dealer can beat it, great, but this way, you’re not stuck with accepting the terms that they put in front of you.”

2. Consider domestic auto brands first for better deals.

Some domestic manufacturers are sitting on roughly 200 days of inventory, compared with just 30 days for popular imported brands such as Toyota, Tucker said. “That means that they are far more willing to negotiate with you on the price, and those cars are probably better quality than you think they are if you haven’t been car shopping in a decade or so,” he added.

3. Bump up your down payment amount.

Make a larger down payment — 15% to 20% of the sticker price — if possible. This reduces how much money you’ll need to borrow, which can lead to better rate offers.

4. Avoid extended loan terms. 

In October, 27.5% of all auto loans had a term of 72 months (six years) or longer, up 300 basis points over a year ago, according to Cox Automotive’s Dealertrack Credit Availability Index. While the monthly payment may be lower with a longer loan term, you’ll pay considerably more interest for longer.

“It’s not a great idea to stay in debt for a really long time for a car,” Tucker said. “People really focus on the monthly payment. You want to pay more attention to the bottom line of the deal.”

5. Sell your trade-in privately, or shop it to multiple dealers.

If you have a car you plan to sell before purchasing your next one, try selling it privately first. Oftentimes, you’ll net a much higher price than what a dealer might offer. The flip side? It takes more effort and legwork on your part.

If you opt to sell your trade-in to a dealer, shop it around, Tucker said. “If the dealer you’re working with is not offering you the price that you think the trade-in is worth, [it’s] worth shopping around a bit,” he added.

6. Prioritize vehicles with extended warranties over luxury rides.

You might be tempted to keep up with the Joneses and get a luxury vehicle, but being practical benefits you more in the long run. Look for reliable vehicles with extended warranties; some brands offer 10-year powertrain warranties, Tucker said. “The nicer car doesn’t add as much quality to your life as keeping the difference in the money would,” he said.

7. Buy a used car when possible.

Cars are generally considered a depreciating asset, so it typically makes more sense to buy a used car — especially if you’re strapped for cash. But while you’ll pay less for a used vehicle, be prepared for sticker shock on those vehicles, too.

According to Edmunds, the average sales price of three-year-old used vehicles exceeded $31,000 as of the second quarter of 2025. These vehicles are also taking longer to sell —38 days, up six days from the same period a year ago. Dealers tend to slash prices on their unsold 2025 inventory to make way for 2026 models, giving you a chance to score a better deal on a newer vehicle.

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