• About 9% of subprime auto borrowers were more than 60 days past due in the fourth quarter.
• These borrowers are the most exposed to default risk and tend to hold vulnerable financial positions.
• The government has frozen interest on student loans and evictions, but there is little help for those with car loans.
• See more stories on the Insider business page.

The uneven economic fallout from the pandemic is now manifesting itself in auto loan repayments, especially in their absence.

More than 9% of subprime auto borrowers – those classified as having a higher risk of default – were more than 60 days past due in the fourth quarter of 2020, according to TransUnion data cited by The Wall Street Journal. This means that a lot of people just can’t pay off their auto loans just yet.

This share is the highest since 2005, just before a wave of defaults triggered the global financial crisis. Meanwhile, 10.9% of subprime borrowers with auto loans were over 60 days overdue in February, up from 10.7% in January and a sixth consecutive monthly gain.

This is the last warning sign of the uneven economic recovery in “K” of the pandemic in which low-income Americans, women and minorities who faced disproportionate economic hardship in early 2020 have fallen behind luckier Americans as the country slowly reopens. This has been visible in everything from unemployment rates to the wealth gap, and auto loans can serve as critical indicators of widespread economic damage.

Aside from student loans and mortgages, auto purchases are the biggest payments many Americans make. Failure to repay loans or leases could indicate economic fragility and a looming financial crisis.

The federal government has passed more than $ 5 trillion in fiscal stimulus to combat the economic pain of the virus. Direct payments and extended unemployment benefits have been widely used to repay debts, according to Federal Reserve research. A freeze on student loan payments and a federal moratorium on evictions avoided further financial pressures.

Yet those struggling with auto loans and leases have received little support. These borrowers are at the mercy of private banks and lenders, many of whom continued to demand payments during the period.

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. Subprime borrowers are the most at risk because they tend to be in a more vulnerable financial situation.

The growing share of delinquent subprime auto borrowers presents a new risk at a pivotal time for the country. Economic data for March showed recovery take steam throughout the past month. The government employment report released on Friday added to the bullish sentiment, with the increase in the wage bill of 916,000 exceeding economists’ forecasts.

However, the strong progression only marks the base of the mountain. The country is still down 8.4 million jobs since the start of the pandemic, and that does not include misclassifications or Americans who have dropped out of the workforce. Accounting for these groups brings the sum to 14.3 million, according to Insider’s calculations.

With so many jobless and the spread of COVID-19 variants, the risks for the nascent recovery remain. A spate of auto loan defaults could further exacerbate the slowdown and freeze the rebound as it accelerates.