Car Repossessions Surge 43% in Two Years Amid Persistent Inflation and Rising Interest Rates

Vehicle repossessions across the United States rose 43% between 2024 and 2026, according to recent data reflecting a growing wave of financial distress among car owners. This surge coincides with sustained high inflation, rising borrowing costs, and increased vehicle prices that have outpaced wage growth for many Americans. As monthly payments climb, more borrowers are falling behind, triggering repossession actions by lenders and leasing companies. The increase is particularly notable in the automotive financing sector, where delinquency rates have climbed steadily. Among major automakers, General Motors (GM) and Ford (F) reported higher levels of outstanding loans with payment delinquencies, while Tesla (TSLA) saw a rise in leased vehicle repossessions amid tighter credit conditions. Ride-hailing platforms like Lyft (LYFT) and Uber (UBER), which rely heavily on driver-owned vehicles, are also seeing increased fleet maintenance issues linked to repossession risks, affecting their operational stability. Key figures show that the average auto loan balance now exceeds $42,000, up from $35,000 in 2022, while interest rates on new vehicle loans have averaged 7.8%, nearly double the pre-pandemic rate. These factors have made debt servicing increasingly unmanageable for lower- and middle-income borrowers, especially in regions with limited job growth and stagnant wages. The ripple effects extend beyond individual households. Financial institutions face higher credit risk projections, leading some to tighten lending standards. Auto dealerships report declining trade-in values and rising inventory costs due to repossession backlogs. Meanwhile, insurers and recovery firms are experiencing increased workload, signaling broader systemic pressure within the consumer credit ecosystem.