Car repossessions are up 23% – here's how to avoid falling behind on payments

Americans are struggling with a spike in car trouble that has nothing to do with their carburetors or brake pads. According to a July 2024 Cox Automotive report, car repossessions are up 23% compared to last year, which is also 14% higher than the 2019 pre-pandemic levels.

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Repossessions occur when you fall behind on your car payments, usually by two to three months. The car market has faced its fair share of challenges this year with prices slipping at the start of the year to a widespread cyber attack in June. Recently, there have been positive signs for used car dealers, as wholesale used-vehicle prices increased 1.8% in the beginning of June, a modest growth. According to data from Edmunds, an online source for automotive information, the June 2024 APR for used and new vehicles was 7.3% and 11.5% respectively.

Car loan interest rates have hit some of their highest levels in recent memory, and a higher rate generally means a more expensive loan — which naturally can cause an uptick in delinquencies. If you struggle with making your monthly payments, you can avoid delinquency on your auto loan in a few different ways.

• Work with your lender: Many lenders prefer to avoid repossessing your vehicle, as this usually gets them significantly less money. Keeping an open line of communication with your lender may help you find a solution that can allow you to keep making payments.
• Look into refinancing options: Refinancing your current car loan could mean you end up with a lower interest rate or adjust your payment timeline making your ability to pay easier.
• Sell the car: While you're still on the hook for your loan even if you sell your car, you can put the money you make from the sale towards your debt. Depending on the car's value and how much you owe, it might not fully pay off the loan — but it's a start.

If you're looking to get a car loan but don't have the best credit, there are options that could fit your needs.

MyAutoLoan could be a great choice if you want to be able to look around and shop for the best rate. It will match you with up to four pre-qualified loan offers with APRs starting at 7.24% after you complete a brief form. MyAutoLoan also only uses a soft credit check when matching you with lenders, so you can compare offers without hurting your credit score.

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