The number of borrowers who are at least 60 days late on making their car payment has gone up 26.7% from a year ago, according to Cox Automotive research. Of all loans, 1.84% are severely delinquent, the highest rate since February 2009. The subprime space is even worse.

“Subprime is definitely having some trouble out there making those monthly payments on their car loans,” Cox Automotive Senior Economist Charlie Chesbrough told Straight Arrow News. …

In December, 7.11% of subprime auto loans were severely delinquent, the highest rate since Cox Automotive started tracking the data set in 2006. Chesbrough said a large portion of those will likely turn into defaults, which will trigger repossessions.

[As Chesbrough notes, the subprime portion of the auto-loan market has shrunk considerably since the last financial crisis in 2008. A collapse here would be orders of magnitude smaller than the subprime mortgage collapse in that crisis as well. But it still would do considerable damage to institutional investors and those who picked up the risk on those bonds. It’s another reminder that subprime needs to be kept small and watched carefully, especially when it leaks into those areas. — Ed]