While vehicle prices have been going up, auto loan delinquency rates have remained surprisingly low for the first two years of the pandemic.

Unfortunately, this is no longer the case. As the Federal Reserve works to address growing inflation, more borrowers are falling behind on their auto loans, and we can expect delinquency rates to return to normal pre-pandemic levels over the coming months.

Why did auto loan delinquency rates remain steady?

Following the February Fed meeting, new data indicated that government assistance helped play a key role in keeping delinquency rates steady over the past two years. Because many of the Americans receiving extra assistance during this time also fall under the subprime category, it meant fewer loan originations.