US car repossessions surge as more Americans default on auto loans
2 days ago
- #sub-prime-lending
- #financial-crisis
- #auto-loans
- Recent collapses of Tricolor and First Brands raise concerns about credit stress in lower-income households and auto debt markets.
- Sub-prime auto lending issues are seen as potential indicators of broader economic pressures.
- Auto repossessions surged to their highest level since 2009, with 1.73 million vehicles seized in 2023.
- Delinquency rates for sub-prime auto loans hit 6.5%, the highest in over 30 years.
- High car prices, inflation, and interest rate hikes have made auto loans less affordable, with average monthly payments exceeding $750.
- Repo businesses report increased workload and challenges due to heightened consumer rights awareness and potential confrontations.
- Economic stimulus during the pandemic led to inflated car purchases, leaving many borrowers with unaffordable loans.
- Potential failure of major sub-prime lenders like Santander Consumer could trigger wider financial turbulence.
- Tricolor's bankruptcy, amid fraud allegations, adds uncertainty but may not yet signal a sector-wide crisis.