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Car seizures are on the rise and financial analysts fear the trend will continue, according to a report.
The auto loan industry is very different than it was at the start of the pandemic, when Americans were boosted by stimulus checks and lenders were more willing to accommodate those who were behind on their payments, reports NBC News.
The number of people behind on car payments has approached pre-pandemic levels in recent months. For consumers with the lowest incomes, the rate of defaults now exceeds 2019, according to data from the rating agency Fitch.
The trend should continue in 2023, as economists anticipate a rise in unemployment, inflation that remains high and a decline in household savings.
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Recovery agent or ‘repo man’ Todd O’Connor lifts a car for towing while repossessing vehicles in the early hours of October 12, 2012 in Oneida, New York. O’Connor, who works for Advanced Recovery of New York, works with other agents day and night l (John Moore/Getty Images/Getty Images)
The average monthly payment for a new car has increased 26% since 2019 to $718 per month, the report says. Nearly one in six new-car buyers spend more than $1,000 a month on vehicles, and the costs associated with owning a car, including insurance, gas and repairs, have skyrocketed .
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“These foreclosures are for people who could afford that monthly payment of $500 or $600 two years ago, but now everything else in their lives is more expensive,” said Ivan Drury, news director at the site. purchase of Edmunds cars. “That’s where we start to see the repossessions happen because everything else starts to corner you.”
Some noticed that the number of rests increased earlier this summer. Joey Poliszczuk leads the Phoenix area businesses, Hoist Towing & Recovery and Gorilla Towing & Recovery. He told FOX 10 in July that he believed the unstable economy meant the number of repossessions would continue to soar.
FILE – In this March 24, 2021 file photo, midsize pickup trucks and full-size vans are seen in a parking lot outside a General Motors assembly plant where they are produced in Wentzville, Mo. The global shortage of computer chips has forced automakers (AP Photo/Jeff Roberson, File/Associated Press)
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“The rate of defaults and foreclosures is not expected to reach the levels of 2008 and 2009, when there was a spike caused by the financial crisis. The percentage of auto loans 30 days past due was 2.2 % in the third quarter versus 2.35% delinquencies over the same period in 2019, according to data from Experian. In contrast, just over 4% of auto loans defaulted in 2009,” NBC News said. .
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