Consumer Loan Charge-Off Rate: 2.81% in Q4 2025
Consumer Loan Charge-Off Rate fell to 2.81% in Q4 2025, down 0.08pp from Q3 2025. Year-over-year, down 0.17pp from 2.98%.
Consumer Loan Charge-Off Rate -- Historical Chart
Consumer Loan Charge-Off Rate. Gray shaded areas indicate U.S. recessions.
Source: Federal Reserve Bank of St. Louis (FRED), Series CORCACBS. Updated 2026-03-09.
What the Q4 2025 Data Shows
At 2.81%, consumer loan charge-off rate in Q4 2025 is above the 10-year average of 2.11% by 0.70pp. The reading has been mixed recently, fluctuating without a clear directional trend over the past 4 quarters.
The consumer loan charge-off rate (FRED series CORCACBS) measures actual losses on auto loans, personal installment loans, and other non-card consumer credit at U.S. banks. This excludes credit cards (tracked separately) and real estate loans.
Auto loans make up the largest component. When a borrower defaults on a car loan, the bank repossesses and sells the vehicle. The charge-off is the difference between the loan balance and what the bank recovers at auction. In a market where vehicle values are declining, recovery rates fall and charge-offs increase.
This series is seasonally adjusted and published quarterly, covering all FDIC-insured commercial banks. It is a key metric for auto lenders, personal loan platforms, and consumer credit investors.
What This Metric Measures
This page tracks the annualized percentage of consumer loans (auto, personal, and other non-card credit) at all commercial banks written off as uncollectible. The data comes from the Federal Reserve Bank of St. Louis FRED database, series CORCACBS, updated quarterly.
Historical Context
The all-time peak was 6.60% in Q1 2010 — roughly 2.3x the current level. The all-time trough was 0.82% in Q1 1985. During COVID-19, the reading hit 2.28% (Q1 2020). Year-over-year, the metric has moved -5.7%.
Why It Matters
Consumer charge-offs reflect the real losses banks are taking on household lending. For auto dealers and fintech lenders, rising consumer charge-offs mean tighter warehouse line terms and higher cost of capital. For consumers, it means banks will raise rates and tighten approval criteria for auto and personal loans.
The auto loan segment is particularly sensitive to used-car price movements. When used-car values fall, more borrowers find themselves underwater (owing more than the car is worth), and recovery rates on repossessed vehicles decline, pushing charge-offs higher.
What This Means for Business Owners
Understanding where this metric stands relative to historical norms helps business owners make better borrowing decisions. When consumer loan charge-off rate is above its 10-year average, it signals changing conditions in the credit markets that affect both cost and availability of financing.
Comparison: Related Series
| Series | Current | Period | YoY Change |
|---|---|---|---|
| Consumer Loan Charge-Off Rate | 2.81% | Q4 2025 | -0.17pp |
| Consumer Loan Delinquency Rate | 2.62% | Q4 2025 | -0.14pp |
Consumer Loan Charge-Off Rate -- Frequently Asked Questions
The consumer loan charge-off rate is 2.81% as of Q4 2025, per FRED series CORCACBS. This covers auto loans, personal loans, and other non-card consumer credit at all U.S. banks.
Consumer loan charge-offs typically run lower than credit cards because many consumer loans are secured (auto) or have structured repayment. Card charge-offs are consistently higher due to the unsecured, revolving nature.
Rising unemployment is the primary driver. Falling used-car values are a secondary factor for auto loans specifically. When both happen simultaneously -- as in a recession -- consumer charge-offs spike sharply.
The peak was 6.60% in Q1 2010. The Great Recession produced the highest consumer charge-offs on record as unemployment exceeded 10% and vehicle values cratered.
The rate moved down by 0.08pp from Q3 2025 to Q4 2025. The reading has been mixed recently, fluctuating without a clear directional trend over the past 4 quarters.
FRED series CORCACBS, from the Federal Reserve Board of Governors quarterly Charge-Off and Delinquency Rates release. Seasonally adjusted.