Sept Auto Update: Bank Delinquencies Stabilize, But Subprime Impairments Hit New Record

This month’s report combines FFIEC bank call report data with dv01’s subprime auto insights, offering a full-spectrum view of origination shifts, delinquency trends, and impairment dynamics across the auto market.

Quick Insights

Subprime Auto continues to materially underperform seasonal norms, with weakness concentrated among borrowers already delinquent. Meanwhile, First-Time Impairments remain stable, suggesting underwriting quality hasn’t deteriorated.

Bank Call Report Data: Delinquencies Plateau, Defaults Diverge

• Delinquencies in bank-held auto loans remain nearly 100 bps above pre-COVID levels, but have flattened in 2025, signaling stabilization.

• Charge-offs are rising faster than delinquencies, pointing to weaker cure activity and possible servicing gaps at smaller regional banks.

• National banks—which hold 85% of auto balances—are performing far better than regionals, though still showing elevated charge-off behavior.

dv01 Subprime Auto Loan-Level Data: Impairments Reach All-Time High

• 30+ Impairments climbed 9 bps MoM, setting a new record above 20%, the second consecutive record high.

• First-Time New Impairments remain stable, suggesting underwriting standards are holding even as legacy delinquencies worsen.

• Cure and Made Payment rates declined, with more borrowers making partial payments to avoid repossession—keeping charge-offs lower than expected.

• Loss severities rose again in September, now 900 bps above 2019 levels, driven by weaker recoveries despite strong used-car prices.