Car repossessions surge past pre-pandemic levels

Car repossessions are on the rise across the country as more borrowers struggle to keep up with inflated monthly payments.

New data from Cox Automotive shows vehicle seizures spiked 23% in the past year, reflecting the growing financial strain on American households.

With high interest rates and inflation eating into budgets, more borrowers are falling behind on their car loans. The strain pushed car repossessions past pre-pandemic levels, up 14% compared to the first half of 2019.

As lenders show less patience for missed payments, many Americans find themselves forced to choose between keeping their vehicles and covering other essential expenses.

“When you think about the costs for rent and shelter and insurance, all those things hit consumers and they have to choose what they will pay,” said Jeremy Robb, senior director of economic and industry insights at Cox.

“More people are getting behind on payments because everything is more expensive.”

Interest rates drive payments higher

According to car marketplace Edmunds, the average interest rate on a new car loan has climbed to 7.3%, while used car loans average a staggering 11.5%.

Monthly payments have ballooned to $739 for new cars and $549 for used vehicles.

For many Americans, especially those in areas with limited public transportation, a car isn't just a convenience—it's a lifeline to work, school, and medical care.

The loss of a vehicle can have a domino effect on a family's financial stability and quality of life.

Subprime borrowers are feeling especially squeezed. Fitch Ratings reports that in June, 5.62% of subprime auto borrowers were at least 60 days late on their payments, only slightly below the record set in February.

This group is especially vulnerable to economic shifts and rising costs.

Car owners keep their cars running longer

While the average price of a new car was $46,644 in June 2024, Kelly Blue Book notes that about 40% of vehicles sold for under $40,000, with 26% in the $30,000 to $40,000 range.

This shift towards more budget-friendly models suggests consumers are hunting for deals as their wallets take a beating.

Used car prices have gone down slightly at least. The average listing price dropped to $25,251 in 2024, a decrease of $1,700 from the previous year.

This decline likely reflects a combination of increased supply and softening demand as buyers grapple with higher financing costs.

In response to the challenging market, many Americans are opting to keep their current vehicles running longer.

Data from S&P Global Mobility indicates that cars, trucks, and SUVs on U.S. roads are aging. The average vehicle is now 12.6 years old, a new record high.

"It's prohibitively high for a lot of households now," said Todd Campau, aftermarket practice lead at S&P Global Mobility. "So I think consumers are being painted into the corner of having to keep the vehicle on the road longer."