Vehicle Repossessions Rose in the Years Following the Pandemic: CFPB Report

The $1.64 trillion auto loan market is facing ‘increasing consumer risk,’ the agency said.

The Consumer Financial Protection Bureau building in Washington on Jan. 14, 2025. Madalina Vasiliu/The Epoch Times

Auto repossessions surpassed pre-pandemic levels in 2022, with customers owing large sums to lenders even after losing their vehicles, according to a recent report from the Consumer Financial Protection Bureau (CFPB).

In December 2019, 0.61 percent of all outstanding vehicle loans were assigned to repossession, which jumped to 0.75 percent in December 2022, an increase of 22.5 percent in just three years, according to a Jan. 23, 2025, statement from the agency.

“Additionally, lenders were increasingly more likely to use third parties, called forwarders, to manage the repossession process. The use of a third party generally increases consumer costs,” the agency said.

Between January 2018 and December 2022, lenders’ use of forwarding companies jumped from 31 percent to 66 percent.

Even after having their vehicles repossessed, customers ended up owing thousands of dollars, CFPB said. Among customers who had an outstanding loan balance after repossession in December 2019, the average balance was more than $10,000.

By December 2022, this number was at more than $11,000.

Auto repossessions are “extremely disruptive” for consumers, the report said. They “may lose access to their vehicle, which may also prevent the consumer from getting to work; the consumer may still be required to repay any outstanding balance from the loan plus fees associated with the repossession; or the consumer may see a negative impact to their credit score.”

The agency said it analyzed data from nine major auto lenders between 2018 and 2022. The analysis showed “increasing consumer risk in the $1.64 trillion auto loan market.”

After mortgages, auto loans represent one of the biggest sources of consumer credit. As of April 2024, there were more than 100 million active auto finance accounts.

“Supply chain shocks and higher interest rates drove up costs to purchase and finance a car,” said CFPB Director Rohit Chopra. “With outstanding auto loans exceeding a trillion dollars, it’s critical that borrowers can avoid the costly consequences of repossession.”

‘Upside-Down’ Loans

Recent data have shown that Americans were struggling with managing their vehicle loans. An October 2024 report from automotive resource company Edmunds showed that the share of Americans who were “upside down” on their auto loans was on the rise.

Upside-down loans are debts in which the borrower’s loan balance is higher than the value of the vehicle.

“Consumers who are underwater on their car loans owe more money than ever before. The average amount owed on upside-down loans climbed to an all-time high of $6,458 [in Q3, 2024], compared with $6,255 in Q2 2024 and $5,808 in Q3 2023,” the report said.

In September 2024, the U.S. Federal Reserve published a post stating that auto loan delinquency rates had risen “substantially to above pre-pandemic levels” by the end of 2023.

The increase in delinquencies was found to be driven “mainly by loans originated over the past two years.”