Fitch Ratings says 6.90% of subprime auto borrowers were at least 60 days behind on their car payments in January 2026 — the worst reading since the rating agency started tracking the index in 1994. That’s a 32-year record, and it landed even as subprime lenders kept writing more loans, not fewer.
The number sounds abstract until you translate it into what happens at 60 days late. Most subprime contracts allow repossession the moment a borrower defaults, and in many states that can legally happen after a single missed payment. Many subprime loans also carry GPS-linked starter-interrupt devices that can remotely kill the ignition before a tow truck ever shows up. Miss enough payments and the lender doesn’t just take the car back — the borrower can still owe a “deficiency balance” on a vehicle they no longer have, plus a credit hit that locks them out of decent loan terms for years.
A Widening Gap Between Prime and Subprime
The contrast with prime borrowers is stark. Fitch’s prime 60-day delinquency rate sat at just 0.37% over the same stretch, essentially unchanged and about as healthy as it’s ever been. Subprime borrowers are absorbing the full weight of several years of high vehicle prices, elevated interest rates, and thinner household savings. Fitch put it plainly in its own research: “Affordability remains the key pressure point in both prime and subprime auto.”
Losses tell the same story from the lender’s side. Fitch’s annualized net loss rate on subprime auto bonds hit 9.63% by the end of 2025, up from 9.23% a year earlier, while recovery rates, what lenders collect after repossessing and auctioning a car, fell to roughly 32.9%, well below the pre-pandemic norm of nearly 44%. Repos are happening more often and recouping less when they do.
Lenders Keep Lending Anyway
None of this has slowed the subprime money spigot. Subprime auto asset-backed securitizations totaled roughly $41.5 billion in 2025, up from $38.7 billion the year before, per Fitch’s tracking of the market. Wall Street still wants the yield those bonds pay, so dealers and finance companies still have capital to write risky loans.
The downside of that math showed up this year. Tricolor Holdings, a Texas-based subprime lender specializing in buyers without traditional credit files, collapsed into bankruptcy in September 2025 with $945 million in bond principal still outstanding. On August 18, 2026, the SEC charged three former Tricolor executives with fraud, alleging they double-pledged the same subprime auto loans as collateral to multiple lenders to keep the company afloat. JPMorgan alone absorbed roughly $170 million in losses tied to the collapse.
A Slight Cooldown, Still Historically Bad
The most recent reading shows some relief. Fitch’s subprime index eased to 5.67% in June 2026, down 64 basis points from a year earlier. But that’s still well above the 2.58% low Fitch recorded in May 2021, and the agency isn’t projecting a quick fix. Fitch expects “U.S. prime and subprime auto loan ABS performance to deteriorate in 2026 versus 2025 as macroeconomic headwinds, tariff uncertainty and a cooling labor market will continue to pressure affordability.” For anyone financing a car on a subprime rate right now, the record isn’t history. It’s the environment they’re borrowing into.