The 60-day delinquency rate on U.S. subprime auto loans reached 5.2 percent, a record high more than double the rate four years ago and 1.7 percentage points above 2008 Financial Crisis peaks. Prime auto loans are deteriorating too: the 60-day delinquency rate hit 0.4 percent, near its highest level since 2011. Total U.S. auto debt reached $1.71 trillion in Q2 2026, up $28 billion from the prior quarter.
Ally Financial and Capital One face the sharpest downside risk. Both carry substantial subprime exposure; rising charge-offs will compress net interest margins and force downward earnings revisions. Huntington Bancshares, with a meaningful auto lending division, also deserves scrutiny. The market has priced in some credit stress, but delinquencies are now outpacing consensus assumptions.
Watch Q3 earnings closely. Ally reports in late October; Capital One follows shortly after. The critical metrics: loan loss provisions and net charge-off ratios. Any beat to deterioration versus analyst guidance should trigger selling. Higher defaults also make auto loan securitization riskier, reducing funding liquidity and forcing tighter lending standards—a negative feedback loop for auto sales and used car values.
The Federal Reserve's consumer credit report in early December will detail Q3 performance across the industry. That report could reset expectations for full-year charge-offs and force multiple compression for subprime-heavy lenders.
