Fourth-quarter 2024 automotive loans jumped as inventories and incentives grew and interest rates fell, but 2025 is presenting new challenges to auto borrowers.

New auto loans rose 8% year-over-year in the quarter to 6.2 million, TransUnion data show. The growth was spread among all risk tiers, led by super-prime, which grew about 16%. 

Of the originations, 47% were for new vehicles, their highest fourth-quarter share since before the pandemic, the consumer credit reporting agency said.

TransUnion credited the sector growth to late 2024 Federal Reserve interest rate cuts, of which there were three during the year, two of them in the fall.

Some cracks developed in the auto loan picture, though, according to the agency. It noted a five basis-point increase in 60-plus-day delinquencies to about 1.4%, surpassing the past peak delinquency rate of 1.3% reached in the first quarter of 2009, though it said the metric’s growth rate recently slowed.

Recently originated new-vehicle loans show “elevated delinquency levels, particularly for prime and below tiers,” TransUnion said.

In addition, U.S. trade tariffs the new Trump administration set out in the first quarter threaten to erode market improvements, said Satyan Merchant, the agency’s senior vice president, automotive and mortgage business leader. 

“There have been positive signs of recovery and momentum across all tiers, not just super prime. The return of incentives has provided a tailwind to vehicle sales and financing. Nevertheless, some of this progress may reverse if the recently announced trade policies are implemented long-term, as they could further impact affordability.”

Still, Merchant said TransUnion expects auto loan originations grew in the first quarter, when many consumers rushed to buy before any tariff-spurred price increases.