Car Repos Hit Levels Unseen Since 2008 Financial Crisis
Automotive repossessions reportedly jumped last year to the highest level in 15 years.
Around 1.73 million cars were seized by lenders during 2024, Bloomberg News reported Wednesday (March 26), citing data from Cox Automotive. That was a 16% increase from 2023 and up 43% from two years earlier.
The last time car repossessions were at this level was in 2009, when the country was dealing with the fallout from the previous year’s financial crisis, the report added.
As Bloomberg notes, these numbers are another sign that Americans are having trouble staying on top of their monthly bills due to steep interest rates and higher car prices.
The report says that car repossession numbers plunged during the pandemic due to relief efforts for borrowers. But when those measures ended and inflation jumped, borrowers began struggling to repay auto loans, leading to an uptick in repossessions.
The number of subprime borrowers who were at least 60 days late on their loans climbed to 6.56% in January, the most on record, Bloomberg added, citing Fitch Ratings.
Meanwhile, purchasing a car has become more costly, with Cox data showing that the average vehicle loan rate rose by five basis points to 10.16% in February, the highest in four months, with the average monthly car payment coming to $748.
The news comes two months after the U.S. Consumer Financial Protection Bureau warned about a surge in repossessions following the pandemic.
There is also recent data suggesting that access to credit could be tightening, according to the latest edition of the Survey of Consumer Expectations Credit Access Survey from the Federal Reserve Bank of New York.
That survey found that rejection rates have risen across all major credit products, with the perceived probability of a rejection for auto loans coming to 33.5% for February, the highest level since the survey began.
The data also shows that the percentage of consumers who expect credit access to deteriorate in the next year jumped to 46.7%, up from 42.3% in October 2024.
And concerns about higher prices have brought consumers’ long-term inflation expectations to the highest levels in more than three decades.
“There’s a lot of uncertainty in the market,” QED Investors partner Amias Gerety said in an interview with PYMNTS CEO Karen Webster earlier this month. “Consumers are still spending, but you can see hesitancy creeping in, especially when it comes to big-ticket purchases.”
The post Car Repos Hit Levels Unseen Since 2008 Financial Crisis appeared first on PYMNTS.com.