Roughly six million auto borrowers with shoddy credit scores are at least 90 days late on making their loan payments, according to new figures released by the New York Federal Reserve. The percentage of delinquent subprime auto loans has raced to the highest level since 2010.
Since the end of the Great Recession, there’s been an explosion of auto loans, growing to more than $1.1 trillion. That, along with a far stronger economy, has helped fuel a boom in U.S. auto sales.
While Detroit’s sales slowed down earlier this year due to rising prices, General Motors (GM) and Ford (F) on Thursday said sales accelerated in November. The industry is now back on track for record sales in 2016. It could be the eighth-straight year of increases.
But part of those sales may have been fueled by easy availability of credit for borrowers with poor credit, who are evidently now struggling to pay off those loans.