Consumer Auto Repossessions Continue to Rise

As the nation continues to emerge from COVID-19 restrictions and the uncertainly of the coming economic state, auto lenders continue to up their repossessions from consumers.

Knoxville’s WVLT has a couple of suggestions for why:

“I was say tax returns, for the most part, are probably one of the biggest reasons,” Hermes Conde said. ‘People get a couple thousand dollars back from their tax returns and they go put $2 or $3,000 down and get a car and maybe bite off mor than they can chew.”

Some economists suggest the surge in car repossessions can be traced back to COVID relief programs when people chose to buy cars with stimulus checks.

WCPO in Cincinnati shares a similar story:

“The national average that they’re expecting for repossessions for 2022 is around 2.2 million, so when you go back to 2019 at the 1.7 million mark, sure, that’s a relatively large increase,” said Chris Benson, vice president of collection at Ent, a credit union with around $7 billion in assets.

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“You know, looking at the last two years, you have to take into consideration the government assistance programs that were available to members, repossession and foreclosure moratoriums, stimulus funds. I think that had a big impact on keeping delinquency charge off, repossession, and foreclosure at minimum,” said Benson

On the other hand, a story out of Fleet World says drivers may be taking a more proactive approach:

Instead, Shoreham Vehicle Auctions said that drivers who are behind with their monthly payments have been avoiding vehicles being repossessed by turning to a growing number of car buying service companies that will buy their used car online and settle all unpaid finances.

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“It’s good news for drivers who have fallen behind with their car repayments, but this trend has contributed to the wholesale market being short of used cars,” explained Alex Wright, managing director of Shoreham Vehicle Auctions.