Auto loan delinquencies are reaching historic highs — but smart, empathetic servicing can be the difference between charge-offs and recoveries.
In January 2025, 6.56% of subprime auto borrowers were over 60 days past due on their car loans, the highest level recorded since Fitch Ratings began tracking the data in 1994. And while prime borrowers are feeling the pressure too, the strain is most acute among subprime segments, where payment-to-income ratios have been stretched thin by inflation, higher car prices, and rising interest rates.
For lenders, captives, and finance companies, these aren’t just troubling headlines, they’re operational flashpoints.
According to Fitch, auto loans in serious delinquency (90+ days past due) across all borrower types hit 3% in Q4 2024 — the highest since 2010.
Combine that with average new vehicle prices climbing over $48,500 (up from $38,000 in 2020, per Cox Automotive) and a monthly payment average of $755, and it’s easy to see why many consumers are falling behind.
But here’s the key: This moment calls for intelligent, flexible, and compassionate servicing — not just collections.
3 Reasons Why Servicing Matters More Than Ever:
1. A Better Borrower Experience Lowers Delinquency Risk
Borrowers in financial distress don’t need friction. They need fast answers, accessible self-service options, and clear paths to resolution. Servicing Solutions delivers white-labeled and branded customer care that blends compliance with empathy — a proven path to higher resolution rates.
2. Data-Driven Contact Strategies Improve Right-Party Contact
Delinquency recovery hinges on timely, targeted outreach. Our omnichannel and skip tracing strategies ensure we’re connecting with the right person, the right way, at the right time — especially critical when delinquencies spike in subprime portfolios.
3. Loss Mitigation & Recovery Need a Human Touch
As auto prices continue to rise — and tariffs potentially add even more cost volatility — lenders need partners who can support recovery with both efficiency and dignity. Whether it’s hardship support, repossession coordination, or remarketing strategy, our team operates as an extension of yours.
Here’s What’s Ahead:
Experts warn that proposed auto tariffs could raise prices by up to $12,000 more, further compounding affordability issues (NewsNation). If true, delinquencies may continue to climb. But lenders who are proactive about partnering with a high-touch servicing provider will be better positioned to protect portfolios and relationships.
Want to talk strategy?
Whether you’re managing a subprime auto book or looking to stabilize performance during volatile times, Servicing Solutions is ready to help.
Reach us at sales@servicingsolutions.com