Car repossessions have surged dramatically in the first half of 2024, indicating growing financial strain among consumers. According to data from Cox Automotive, vehicle seizures have increased by 23% compared to the same period last year, surpassing pre-pandemic levels by 14%.
This rise in repossessions comes amid a backdrop of high interest rates and persistent inflation, which have put pressure on household budgets. Jeremy Robb, senior director at Cox, notes that consumers are struggling to keep up with various expenses, leading to more missed car payments.
The average interest rates for vehicle loans remain elevated, with new car loans at 7.3% and used car loans at 11.5%. This has pushed monthly payments to near-record highs, averaging $739 for new cars and $549 for used vehicles, as reported by auto research firm Edmunds.
While repossessions dropped during the pandemic due to more lenient lending practices and government stimulus, the current economic climate has reversed this trend. Subprime auto borrowers are particularly affected, with 5.62% being at least 60 days late on payments in June.
As the Federal Reserve considers potential interest rate cuts, many consumers are holding out hope for financial relief. Traders anticipate the central bank may begin lowering rates as soon as September, which could potentially allow borrowers to refinance or re-enter the market.
Information for this story was found via Bloomberg, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
