Student Loan Repayments May Accelerate Auto Delinquencies
A wave of new financial pressure is sweeping across U.S. households—and it’s showing up in auto loan delinquencies.
According to the latest data from VantageScore, auto delinquencies rose across every stage of delinquency for the second straight month. While consumer budgets are already stretched by high interest rates, elevated vehicle costs, and inflation, the resumption of federal student loan repayment is emerging as a critical tipping point for many borrowers.
What does this mean for lenders and recovery teams? A higher volume of high-risk loans, longer recovery timelines, and a growing need for real-time vehicle intelligence.
Credit Scores Slip, Loan Priorities Shift
VantageScore's February CreditGauge revealed that the average national credit score dropped from 702 to 701, breaking an 11-month streak of stability. While the decline may seem small, analysts call it unusual—and they attribute it to a reordering of debt priorities.
As student loan repayments resume after a multi-year hiatus, consumers are being forced to choose which bills to pay first. According to Susan Fahy, EVP at VantageScore, auto loans are slipping in priority, especially as balances grow and other obligations resurface.
Key Auto Finance Trends at a Glance
Auto delinquencies increased across all buckets, from early-stage (30+ days) to late-stage (90+ days)
90–119 day delinquencies more than doubled, rising from 0.20% to 0.45% month-over-month
Auto loan balances increased 1.7% year-over-year, even as originations remained flat
Student loan delinquencies reappeared on credit files for the first time in five years
As many as 9.2 million borrowers are expected to be reported as delinquent by June 2025
The Student Loan Effect
Roughly 22 million Americans are no longer in forbearance on their student loans—and more than 9 million are already behind. With these delinquencies now being reported again to credit bureaus, the downstream effects on auto lending are significant:
Many borrowers with existing auto loans and student debt are experiencing rapid declines in credit score
Borrowers with strong payment histories may benefit, while others may lose up to 129 points on their score
The court ruling against the SAVE Plan could push another 8 million borrowers into repayment with limited relief
For lenders, this introduces fresh uncertainty into portfolio performance. For recovery teams, it signals a likely rise in volume—and a need to act faster to reduce losses.
What This Means for Recovery and Risk Management
In this evolving financial landscape, delinquencies won’t just increase—they’ll accelerate. Vehicles may become harder to trace as owners juggle competing priorities, and impound or resale events will happen under tighter timeframes.
To stay ahead:
Monitoring must evolve—real-time VIN alerts will be key
Recovery prioritization must sharpen, with higher-risk loans flagged early
Visibility into impound, private lot, and resale activity will separate those who react from those who lead
The signals are clear: Auto risk is rising fast—and it’s converging with pressures from other sectors.
