US Car Repossessions Surge as Defaults Rise

Car repossessions are surging across the U.S. as more Americans fall behind on auto loans, raising concerns on Wall Street that rising defaults could signal deeper financial strain. The recent bankruptcies of subprime lender Tricolor and auto parts supplier First Brands have added to fears of instability in the car lending market—an industry now showing cracks similar to those that preceded the 2008 financial crisis.

“Right now, we’re overwhelmed with work,” said George Badeen, president of Allied Finance Adjusters, noting a sharp rise in repossessions, especially among subprime borrowers. Fitch Ratings recently reported that 6.5% of subprime auto borrowers are at least 60 days behind on payments—the highest rate in over three decades.

Experts say the pressure reflects how inflation, higher interest rates, and pandemic-era price spikes have left consumers struggling with record car payments averaging $750 a month. “Stress in auto financing is a warning sign,” said Columbia Business School economist Brett House. “When people can’t afford their cars, it’s often the first indication that household finances are getting tighter.” Source: https://www.theguardian.com/