Car Repos Rising

Car repossessions continue to rise, as consumers fall behind on their car payments due to higher car prices and prolonged inflation, according to a report by NBC News. Loan defaults now exceed where they were in 2019, pre-pandemic. Economists are predicting 2023 to continue that trend, with increasing unemployment, high inflation and dwindling household savings. 

The average monthly payment for a new car is up 26% since 2019 to $718, with nearly one in six new car buyers spending more than $1000 a month on vehicles.  

“These repossessions are occurring on people who could afford that $500 or $600 a month payment two years ago, but now everything else in their life is more expensive,” said Ivan Drury, director of insights at car buying website Edmunds. “That’s where we’re starting to see the repossessions happen because it’s just everything else starting to pin you down.” 

Consequently, the repo business is having a hard time keeping up, as 30% of repo firms left the business when repo rates plummeted in 2020. Jeremy Cross, the president of International Recovery Systems in Pennsylvania, said he can’t find enough repo men to meet the demand. He said lenders are paying him premiums to repossess their cars first in anticipation of a continued increase in loan defaults.  

Source: nbcnews.com