NoodleNumbat
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US Car Repossessions Soar as Defaults on Auto Loans Rise Amid Financial Tightening
The US car lending market is witnessing a sharp increase in repossessions, with over 1.73 million vehicles seized last year, the highest level since 2009. The surge in repossession activity is attributed to a spike in defaults among sub-prime auto borrowers, who are struggling to make payments due to rising interest rates and increased loan repayments.
According to industry experts, the recent collapse of used car seller Tricolor and auto parts supplier First Brands has put the finance industry on edge. The troubles faced by these companies have raised concerns about broader pressures rippling throughout the wider economy, with some warning that the problems in the auto lending market could be a "canary in the coalmine" for the health of the US economy.
"We've seen some sub-primes making changes, which probably indicates they're having issues," said George Badeen, president of Allied Finance Adjusters. "They're not financing cars like they were two years ago."
The auto lending market has been experiencing strain in recent years due to rising car prices and increased loan repayments. The average monthly repayment now stands at over $750, up from about 33 weeks' income before the pandemic.
The rise in repossessions is attributed to a combination of factors, including higher interest rates, increased debt levels, and reduced consumer confidence. "Consumers got stuck with loan payments they can't afford," said Kevin Armstrong, author of Repo Blood: A Century of Auto Repossession History.
Industry experts warn that the situation could worsen if Congress fails to agree on a continuation of Covid-era healthcare subsidies, which could put more pressure on the finances of auto borrowers. "That whole mess comes out of Covid. It has an impact on individual people that many people don't understand," said Badeen.
The repo industry is also facing challenges due to increased consumer rights awareness and a higher likelihood of confrontation. "We've had so much violence in recent years that we've had to train our people in what people like to call situational awareness and de-escalation," said Badeen.
As the US car lending market continues to experience strain, industry experts are warning that the problems faced by Tricolor and First Brands could be a harbinger of wider turbulence. "Tricolor's failure is not necessarily indicative of what is immediately ahead for the sector as a whole, because of the special circumstances," said Brett House, an economics professor at Columbia Business School.
However, Armstrong notes that the situation is on the verge of getting worse. "But it's on the verge."
The US car lending market is witnessing a sharp increase in repossessions, with over 1.73 million vehicles seized last year, the highest level since 2009. The surge in repossession activity is attributed to a spike in defaults among sub-prime auto borrowers, who are struggling to make payments due to rising interest rates and increased loan repayments.
According to industry experts, the recent collapse of used car seller Tricolor and auto parts supplier First Brands has put the finance industry on edge. The troubles faced by these companies have raised concerns about broader pressures rippling throughout the wider economy, with some warning that the problems in the auto lending market could be a "canary in the coalmine" for the health of the US economy.
"We've seen some sub-primes making changes, which probably indicates they're having issues," said George Badeen, president of Allied Finance Adjusters. "They're not financing cars like they were two years ago."
The auto lending market has been experiencing strain in recent years due to rising car prices and increased loan repayments. The average monthly repayment now stands at over $750, up from about 33 weeks' income before the pandemic.
The rise in repossessions is attributed to a combination of factors, including higher interest rates, increased debt levels, and reduced consumer confidence. "Consumers got stuck with loan payments they can't afford," said Kevin Armstrong, author of Repo Blood: A Century of Auto Repossession History.
Industry experts warn that the situation could worsen if Congress fails to agree on a continuation of Covid-era healthcare subsidies, which could put more pressure on the finances of auto borrowers. "That whole mess comes out of Covid. It has an impact on individual people that many people don't understand," said Badeen.
The repo industry is also facing challenges due to increased consumer rights awareness and a higher likelihood of confrontation. "We've had so much violence in recent years that we've had to train our people in what people like to call situational awareness and de-escalation," said Badeen.
As the US car lending market continues to experience strain, industry experts are warning that the problems faced by Tricolor and First Brands could be a harbinger of wider turbulence. "Tricolor's failure is not necessarily indicative of what is immediately ahead for the sector as a whole, because of the special circumstances," said Brett House, an economics professor at Columbia Business School.
However, Armstrong notes that the situation is on the verge of getting worse. "But it's on the verge."
1.73 million cars were repossessed last year and it's a total shock 
I can just imagine how stressful it must be for those who are struggling to make payments 
. It's not easy to get back on your feet after the pandemic, and now with rising interest rates and increased loan repayments, it's like being kicked while you're down 
...
I'm like totally freaking out over here! The numbers are crazy - 1.73 million cars repossessed last year? That's insane! 
It just goes to show how tough things are for people trying to get back on their feet financially. Rising interest rates and increased loan repayments are no joke, especially when you're already struggling to make ends meet. I'm all about helping others stay afloat during these crazy times 
Anyway, I guess when Tricolor and First Brands go down, we're all supposed to freak out. 
Who really knows what's going on behind closed doors?
did u guys know that ppl used to get loans for like 3 yrs & now its more like 33 weeks income? that's crazy! 
we need congress to step in & help ppl w/ covid era subs btw 