High LTV Ratios Could Mean More Repos

As auto lenders take on greater risk with soaring loan-to-value ratios (LTV), towing companies could be on the front line of a coming wave of repossessions.

The average loan-to-value (LTV) ratio on used vehicle loans is climbing sharply, posing new risks for lenders and consumers. According to TransUnion’s Q2 2025 Credit Industry Insights Report, 53% of used-car loans now carry LTV ratios above 120%, compared to just 38% in 2022. Loans exceeding 140% nearly doubled over the same period, jumping from 17% to 31%.

Independent finance companies report the highest averages at 139%, followed by credit unions at 128%, and banks/captive lenders at 115%. Rising LTV ratios mean buyers often owe far more than the car is worth, leading to negative equity for much of the loan term. This issue is compounded by longer loan durations, sometimes stretching beyond 72 months, which delays payoff and accelerates financial strain.

For the towing industry, this trend could translate into more repossession work as defaults rise, but it comes with challenges. Lenders under financial pressure may push for faster recoveries and lower rates, while compliance and documentation requirements grow stricter. Storage yards could also fill up quickly, creating space and security concerns. For towers who secure strong relationships with lenders, however, this shift offers an opportunity for steady repo and transport contracts in an increasingly competitive market. https://news.dealershipguy.com