U.S. auto loan debt hits record $1.6 trillion in Q2

U.S. consumers held a record $1.61 trillion in outstanding auto loans in the second quarter, according to data from the Federal Reserve Bank of New York.

The increase reflects the combined impact of elevated vehicle prices, extended loan durations and persistent demand for new and used cars. Total auto loan balances rose by $18 billion from the prior quarter, the New York Fed’s Quarterly Report on Household Debt and Credit showed.

Auto loan originations, including both new and used vehicles, totaled $212 billion in the quarter, up from $205 billion in Q1. The average loan amount for new cars increased to $40,941, while used car loans averaged $26,450, both near record highs.

The average loan term for new vehicles extended to 68 months, up from 66 months a year ago, as borrowers took longer to finance purchases amid higher sticker prices. Interest rates on auto loans also climbed, with the average rate for new car loans reaching 7.2% in June, up from 6.5% at the start of the year.

Delinquency rates remained elevated, with 3.2% of auto loan balances transitioning into serious delinquency—defined as 90 or more days past due—by the end of June. This marks a slight increase from 3.1% in the first quarter and remains above pre-pandemic levels, though below the peaks seen during the 2008 financial crisis.

The rise in auto debt comes as the Federal Reserve maintains higher benchmark interest rates to combat inflation, which has kept borrowing costs elevated across consumer credit markets. Analysts note that while loan growth has slowed from pandemic-era peaks, the sustained increase in balances underscores the financial strain on households amid persistent inflation and higher vehicle prices.