Car repossessions rise 23% year over year
Private debt crisis becoming apparent
(ARMSTRONG ECONOMICS) – The private debt crisis is becoming apparent in America after car repossessions jumped 23% during the first half of 2024. Data shows that 1.6 million Americans will have their car repossessed by the bank before the end of the year, a slight increase from the 1.5 million autos repossessed in 2023 and a drastic upturn from the 1.1 million in 2021.
Obviously, the cost of purchasing a car have drastically risen with inflation, interest hikes, and supply chain shortages. Americans simply cannot afford new autos and car dealerships can do nothing to entice purchases. New car inventory in the US rose 36% this year, close to February 2021 levels before the supply chain crisis put a dent in imports. Yet, the average list price of a new car is $49,096 and far more than the average American can afford. The average new vehicle will sit in a dealer’s lot for 65 days, a 41% annual increase.
Dealerships are hardly asking for a downpayment these days unless someone has horrid credit. Even putting a few grand down will only take off about $20 per monthly payment. The average new car costs about $735 monthly based on data from Experian, and $523 monthly on used models. The average American simply is not educated in finance. Autos are behind mortgages in the largest share of personal household debt and there is a portion of the population who do not understand what they can actually afford.