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Published on January 23, 2025
Auto Repossession Rates Surpass Pre-Pandemic Levels as Financial Strain Hits Consumers, CFPB ReportsSource: Google Street View

In a recent report by the Consumer Financial Protection Bureau (CFPB), the number of auto repossessions in the closing month of 2022 was found to exceed those levels seen before the ongoing public health crisis. The analysis of data from nine major auto lenders, which looked at accounts active between 2018 and 2022, suggests a troubling rise in financial vulnerability within the $1.64 trillion auto loan market. The findings indicate a significant 22.5% increase in repossession eligibility in December 2022 compared to December 2019, signaling a strain on borrowers amid rising costs and interest rates.

"Supply chain shocks and higher interest rates drove up costs to purchase and finance a car," CFPB Director Rohit Chopra stated. Auto loans are a massive segment of consumer credit, second only behind mortgage lending. As of April 2024, with more than 100 million active auto finance accounts and $63 billion in new monthly originations, the repercussions of vehicle repossessions can be severe. Consumers not only risk losing essential transportation but may also be liable for any outstanding balances plus additional repossession fees, which can lead to further negative impacts on their credit scores.

Lenders are increasingly outsourcing to third-party repossession forwarding companies, dubbed forwarders, to manage the process. This shift has been accompanied by an uptick in costs passed down to consumers; usage of forwarders rose drastically from 31% in January 2018 to 66% in December 2022. The CFPB's report highlighted that "average repossession costs charged to consumers were higher when a forwarder was used."

The financial aftermath of a repossession for consumers can extend beyond the immediate loss of their vehicle. After a car is repossessed and sold by the lender, individuals may still owe a significant amount. The average balance for consumers with remaining debt post-repossession was upwards of $10,000 in December 2019. By December 2022, following a brief decline, these balances surged, with the average outstanding figure standing at over $11,000.

For those grappling with auto finance issues or other financial product concerns, the CFPB offers a platform to lodge complaints via their website or through a dedicated helpline at (855) 411-CFPB (2372). In addition, employees who suspect their employers of violating federal consumer financial protection laws can securely inform the bureau at [email protected].