Cars Repossessions Rise 23 Percent In 2024 So Far

Image: Jerr-Dan

A big indication that we may be heading toward a severe economic downturn has been identified by Cox Automotive, as the overall number of car repossessions has increased by 23 percent over last year. Not only that, but the current repossession rate has even eclipsed pre-pandemic levels, with 2024 sitting about 14 percent higher than 2019 repossession numbers. Consumers are falling behind on their car payments, a trend which likely won’t slow down with inflation, higher car prices, and sky-high interest rates kicking American workers in the pocket book. In May the average American new car buyer was paying $760 per month for an auto loan, with 17 percent of car owners committing to a monthly payment over $1,000.

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During 2020, car repossessions dramatically decreased as loan companies became more forgiving of late payments and government stimulus money went toward paying bills in arrears. That downward trend of repossessions continued through 2021 and 2022 as those years were nearly down 30 percent over 2019, though 2023 saw a return to near-2019 levels as lenders rejected their short-term compassionate candy coating. Additional burdens on American workers, including massive recent increases in car insurance costs, and rising housing costs are also contributing factors to these missed payments. Many who might have been able to put together a $600 monthly payment two years ago now can’t.

Analysts suggest the situation is indicative of the fragility of American household budgets. Americans owe at least $1.62 trillion in car loan debt, according to Federal Reserve data from the first quarter of 2024. That’s not quite as high as the over $14 trillion owed on mortgage debt in the U.S. but it’s no less concerning that these payments aren’t being met.

Most Americans don’t have any savings to speak of, and can’t cover an emergency medical procedure or car repair. If the car you owe a $1,000 a month on needs something as simple as tires, it could be the personal crisis that snowballs into bankruptcy. Things don’t look great out there, folks. Hunker down, and maybe consider buying a smaller and more economical car to weather the storm.