Car repossessions have surged in the U.S. during the first half of 2024 as more borrowers fall behind on their auto loans. Repos have gone up by 23% compared to the same time period last year, according to Automotive News. This unusually high number of repos in America is due, in part, to interest rates and inflation pushing monthly car payments to near-record highs this year.
The rate of repossession is so high right now, that it’s blown past pre-pandemic levels and increased by 14% compared to the first half of 2019. Repos had fallen during the global pandemic as lenders became more lenient in light of the situation and stimulus checks from the federal government buoyed buyer incomes.
But lenders are reportedly less tolerant of late payments now that the pandemic has abated, and the former widespread policy of repossessions being triggered by three months of missed payments seems to be in full effect. Auto News cites data from Cox Automotive, which says these unprecedented numbers of repos are also due to high interest rates and inflation in the U.S.
Average interest rates for new car loans are at 7.3% right now, while the average for used car loans is sitting at 11.5%, per Edmunds. These rates result in an average monthly payment of about $740 for a new car and $552 for a used one. Some people are choosing to avoid such payments, which has led to the average age of vehicles steadily rising in the U.S. to 12.5 years.
As interest rates and inflation shoot upwards sharply, the cost of living goes up across the board and something has to give. More Americans are now finding themselves in the uncomfortable position of choosing between making their car payments or making rent, as one senior director at Cox Auto, Jeremy Robb, explains, “When you think about the costs for rent and shelter and insurance, all those things hit consumers and they have to choose what they will pay. More people are getting behind on payments because everything is more expensive.”
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