During tax season, the auto-repossession sector typically sees a dip in repossessions as customers receive additional cash and pay down their obligations.

Recent data from Fitch Ratings and the Federal Reserve Bank of New York indicate a concerning rise in auto loan delinquencies, escalating household debt, and diminishing consumer savings, signaling potential stress in the U.S. economy and perhaps a different tax season for those in the auto-repossession space.

Surge in auto loan delinquencies

Fitch Ratings reports that the percentage of subprime automobile borrowers who are at least 60 days past due on their loans has risen to 6.56%, the highest level since the agency began collecting data in 1994.

Similarly, the Federal Reserve Bank of New York notes that 3% of auto loans across all borrower categories are 90 days or more delinquent, a rate not seen since 2010.  These trends are attributed to higher car prices and increased interest rates, which have elevated monthly payments and strained consumers across various income and credit score levels.

The report also underscores a notable increase in the number of loan accounts. Specifically, auto loan accounts have risen steadily, with approximately 300 million accounts currently open, significantly higher than historical averages. Concurrently, credit card accounts have surged dramatically, nearing 600 million accounts, underscoring increased reliance on credit amid financial strain.

Escalating household debt

The Federal Reserve Bank of New York’s latest Quarterly Report on Household Debt and Credit reveals that total household debt increased by $93 billion in the fourth quarter, reaching $18.04 trillion.  This uptick encompasses various debt categories:

—Mortgage balances: Increased by $11 billion, totaling $12.61 trillion.

—Credit card debt: Rose by $45 billion, reaching $1.21 trillion.

—Auto loans: Grew by $11 billion, amounting to $1.66 trillion.

The report also indicates that 3.6% of total debt is in some stage of delinquency, a slight increase from the previous quarter’s 3.5%.

Declining consumer savings

During the pandemic, households accumulated significant liquid assets due to government aid and reduced spending opportunities. However, a report from the Federal Reserve Bank of San Francisco from last year indicates that these reserves are now largely depleted as living costs have surged. This depletion has led to increased credit card borrowing, with delinquency rates reaching a 12-year high. Non-housing debt also hit a record $4.9 trillion in the second quarter.

Current unemployment rate

The U.S. Bureau of Labor Statistics reports that the unemployment rate remained steady at 4.0% in February 2025, with the economy adding 170,000 jobs during the month. This stability in the labor market provides some optimism; however, the broader economic indicators suggest underlying financial stress among consumers

Implications for the economy

The convergence of rising auto loan delinquencies, escalating household debt, and dwindling consumer savings paints a concerning picture of the U.S. economy. These trends suggest that many consumers, particularly those with lower incomes, are experiencing heightened financial stress.

Economists caution that if these patterns persist, they could lead to broader economic challenges, including reduced consumer spending and slower economic growth.

Andy Sinclair currently is president of Repo Report, which offers software solutions for the auto repossession domain, and a professor at Wilmington University. Previously, he was vice president at International Recovery System. He’s also pursuing his doctoral degree at Florida Atlantic University.