Rising Auto Repossessions: What Borrowers Need to Know
Understanding why more vehicles are at risk of repossession, how lenders act, and what steps drivers can take to protect themselves.
Across the United States, more vehicles are now at risk of repossession than they were before the COVID-19 pandemic, according to new federal data from the Consumer Financial Protection Bureau (CFPB). In late 2022, the share of auto loans far enough past due that lenders sent vehicles out for repossession was about 22.5 percent higher than in December 2019. This shift highlights growing financial stress for many households and renewed scrutiny of auto lending and collections practices.
This article explains what is changing in the auto finance market, why so many more vehicles are eligible for repossession, and what borrowers can do to reduce their risk and respond if they fall behind.
How Auto Repossession Works in a Typical Loan
When you finance a vehicle, your lender usually has a security interest in the car or truck. If you miss payments or break key terms of the contract, the lender can take the vehicle back, often without going to court, depending on state law.
- Collateral-based credit: The vehicle secures the loan, so failing to pay can quickly put the car at risk.
- Default triggers: Falling a certain number of days past due (often 30 days or more), lapses in required insurance, or other violations can lead to repossession eligibility.
- Use of third parties: Many lenders rely on repossession agencies and forwarding companies to locate and tow vehicles.
While the specifics vary by contract and by state, the key takeaway is that repossession is a contractual remedy that lenders can initiate when delinquency reaches a certain threshold.
From Delinquency to Repossession Assignment
The CFPB distinguishes between a loan that is simply late and one that has progressed far enough to be assigned for repossession. This is an important difference:
- Delinquency: A borrower is behind on payments but may still be making partial or irregular payments.
- Repossession assignment: The loan is sufficiently past due that the lender has instructed a third party to take the vehicle.
- Completed repossession: The vehicle is actually recovered, and the borrower loses possession.
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According to the CFPB’s auto finance data pilot, by December 2022 about 0.75 percent of all outstanding auto loans in the dataset had been assigned for repossession, up from 0.61 percent in December 2019. While those percentages may look small, this represents a large number of households and a clear move above pre-pandemic levels.
What Has Changed Since Before the Pandemic?
The increase in repossession eligibility is the result of overlapping economic and market factors that developed during and after the pandemic.
1. Higher Vehicle Prices and Larger Loan Balances
During the pandemic, supply chain disruptions and limited inventory pushed used and new vehicle prices sharply higher. The CFPB notes that COVID-era price increases significantly affected what borrowers owed and what lenders could recover after repossession.
- Many borrowers financed larger loan amounts for the same type of vehicle compared with pre-pandemic years.
- As used vehicle prices later declined, more repossessed vehicles ended up selling for less than the remaining balance, leading to a higher share of deficiency balances owed after the sale.
2. End of Temporary Relief and Stimulus
In the early stages of the pandemic, some lenders slowed or paused repossessions, and many borrowers benefited from stimulus payments, expanded unemployment benefits, and other forms of temporary relief.
- These supports allowed many struggling households to keep up on auto payments, at least for a time.
- As those programs ended and savings cushions were depleted, more borrowers began to fall behind.
3. Rising Financial Strain on Households
Recent assessments of consumer finances point to mounting pressure on household budgets. Axios, citing CFPB data and other indicators, reports that rising auto repossessions and increases in credit card minimum payments signal that many consumers are increasingly stretched.
- High inflation in recent years has raised the cost of essentials like food, housing, and insurance.
- Higher interest rates have pushed up monthly car payments for recent borrowers and those who refinanced.
- Combined, these forces make it harder for some households to prioritize auto loans over other urgent bills.
Key Findings from the CFPB’s Auto Repossession Data
The CFPB’s report offers one of the clearest data-driven pictures of how repossession has changed over time.
| Indicator | Pre-Pandemic (2019) | Pandemic & Aftermath (2022) | Trend |
|---|---|---|---|
| Share of loans assigned for repossession | 0.61% (Dec 2019) | 0.75% (Dec 2022) | Up 22.5% from 2019 |
| Share of assignments that result in completed repossession | About 38% (2019) | About 27% (Sept 2022) | Lower completion rate over time |
| Share of completed repossessions with deficiency balance | Lower before 2021 | About 95% by late 2022 | Much higher deficiency risk |
| Share of completed repossessions that are voluntary | 15–19% (2018–2019) | Spike to 63% in early 2020, then decline | Temporary surge in voluntary surrenders |
More Assignments, Fewer Completions
Interestingly, while more loans are reaching the point of repossession assignment, a smaller share of those assignments end with a vehicle actually taken. The CFPB finds that only about 27 percent of assignments were completed in September 2022, down from 38 percent in 2019. That pattern aligns with industry observations that repossession assignments have grown faster than completed repossessions.
Possible reasons include:
- Borrowers catching up on payments or working out arrangements after an assignment is sent.
- Operational bottlenecks or capacity limits among repossession agents.
- Lenders choosing to cancel assignments or delay action as market conditions change.
More Deficiency Balances After the Vehicle Is Sold
Another critical finding is the sharp rise in the share of repossessed vehicles that leave borrowers owing money even after the car is sold. By late 2022, about 95 percent of repossession-related disposals in the CFPB dataset resulted in a deficiency balance.
This reflects:
- Loan balances that remain high relative to the vehicle’s market value.
- A decline in used car prices from their pandemic peaks.
In practice, this means that losing the vehicle often does not end the borrower’s obligation. Lenders may pursue collection of the remaining balance, adding collection costs and sometimes legal fees.
How Repossession Affects Borrowers
Repossession is one of the most disruptive events a borrower can face in consumer credit.
- Loss of transportation: Many people rely on their vehicle to get to work, school, or medical appointments. Losing a car can threaten employment and income.
- Credit damage: A repossession can stay on a credit report for up to seven years, making future borrowing more difficult and more expensive.
- Ongoing debt: If the auction sale does not cover the loan balance and fees, the borrower may owe a deficiency balance that can be pursued in collections.
- Additional fees: Borrowers can face repossession fees, storage charges, and legal costs.
What Lenders Are Doing Differently
The CFPB’s analysis suggests notable changes in how lenders and their agents manage repossessions.
- Greater reliance on data and technology: Many lenders use advanced servicing systems to flag delinquent accounts quickly and to coordinate repossession assignments.
- More frequent assignment activity: As of 2022, the rate of assignments exceeds pre-pandemic levels, indicating that lenders are more often moving accounts into the repossession pipeline.
- Variable approaches to relief: Some lenders may still offer extensions or payment arrangements, but these options differ widely from one company to another.
The CFPB has emphasized that lenders must comply with federal consumer protection laws in both servicing and repossession. The Bureau has also highlighted risks related to inaccurate records, wrongful repossessions, and inadequate communication with borrowers.
How to Reduce Your Risk of Repossession
While broader economic conditions are beyond any one person’s control, borrowers do have concrete steps they can take to lower their chances of repossession or to respond early if trouble arises.
1. Review Your Loan Contract Carefully
- Identify how many days past due count as a default.
- Look for clauses about insurance, late fees, and cure periods (time you have to fix a missed payment).
- Check if there is any mention of repossession charges you could be billed later.
2. Act Quickly at the First Sign of Trouble
Once a loan becomes seriously delinquent, options narrow. Early action can make a large difference.
- Contact your lender before you miss a payment, if possible.
- Ask whether temporary hardship options, extensions, or payment arrangements are available.
- Document all conversations and keep copies of any agreements.
3. Re-examine Your Budget and Priorities
Research on household finances shows that many families juggle competing obligations when money is tight. Transportation to work is often critical to maintaining income, making auto payments an important priority where possible.
- List all recurring bills and identify areas where expenses could be reduced.
- Consider whether refinancing, downsizing to a less expensive vehicle, or selling the car voluntarily could be better than risking repossession.
4. Know Your Rights Under Federal and State Law
Federal consumer financial laws and state repossession rules set boundaries on how lenders and repossession agents may act. For example, most states prohibit breach of the peace during repossession, and federal law restricts unfair, deceptive, or abusive practices.
- Check your state attorney general or state consumer protection office for guidance.
- Review educational resources from the CFPB on auto loans, collections, and repossessions.
5. Seek Help if You Fall Behind
Nonprofit credit counseling agencies and legal aid organizations can help you understand your options and your rights.
- Credit counselors can assist with budgeting and communication strategies with lenders.
- Legal aid or consumer law attorneys can advise you if you believe your rights were violated.
What to Do If Your Car Has Already Been Repossessed
If a repossession has already occurred, the situation is serious but not necessarily final. In many cases, borrowers still have rights to information and, in some situations, to get the vehicle back.
- Request a written accounting: Ask for a detailed breakdown of the amount you owe, including principal, interest, late fees, and repossession-related charges.
- Ask about redemption or reinstatement: Some contracts and state laws allow borrowers to redeem the vehicle by paying the full balance plus costs, or to reinstate by bringing the account current and paying fees.
- Understand the sale process: Lenders typically must provide notice before selling the vehicle and must follow rules for how the sale is conducted and how proceeds are applied.
- Review any deficiency claim: If the sale does not cover what you owe, carefully review any demand for a deficiency balance and seek legal advice if needed.
Broader Signs of Consumer Financial Stress
The rise in repossession eligibility is part of a wider picture. Recent analyses point to increasing auto loan delinquencies and elevated repossession counts, approaching or exceeding levels seen during the Great Recession. Banks and regulators alike are watching these trends as indicators of household financial health.
Key signals include:
- Auto loan delinquencies at or above prior recession-era benchmarks.
- Growing balances and higher rates on credit cards, with more consumers making only minimum payments.
- Continued pressure from high living costs and elevated interest rates.
These developments underscore why understanding repossession risk—and managing auto debt proactively—has become more important than in recent years.
Frequently Asked Questions (FAQs)
Q: How many car loans are being sent to repossession compared with before the pandemic?
According to CFPB data, about 0.75 percent of outstanding auto loans in December 2022 were assigned for repossession, compared with 0.61 percent in December 2019—a roughly 22.5 percent increase in the assignment rate.
Q: Does an assignment for repossession mean my car will definitely be taken?
Not necessarily. The CFPB found that only about 27 percent of repossession assignments in September 2022 led to completed repossessions, down from around 38 percent in 2019. Some borrowers catch up on payments or work out arrangements before the vehicle is actually taken.
Q: If my car is repossessed and sold, can I still owe money?
Yes. By late 2022, about 95 percent of repossessed vehicles in the CFPB data ended with a deficiency balance after the sale, meaning borrowers still owed money on the loan plus fees. The exact amount depends on your contract, the sale price, and state law.
Q: Is voluntary surrender better than waiting for the lender to repossess?
Voluntary surrender may reduce some fees and give you more control over timing, but it still appears on your credit report as a form of repossession. In early 2020, voluntary surrenders spiked to about 63 percent of completed repossessions in the CFPB dataset before falling back toward prior levels. Whether it is the better option depends on your specific situation.
Q: Where can I find reliable information about my rights and options?
The Consumer Financial Protection Bureau provides educational materials on auto loans, collections, and repossessions, and you can contact your state attorney general or state consumer protection agency for information about state-specific rules. Nonprofit credit counselors and legal aid offices can also offer individualized assistance.
References
- Repossession in Auto Finance — Consumer Financial Protection Bureau. 2025-01-25. https://files.consumerfinance.gov/f/documents/cfpb_report-repossession-in-auto-finance_2025-01.pdf
- Credit card debt, auto repossessions reveal growing consumer stress — Axios. 2025-01-28. https://www.axios.com/2025/01/28/consumers-car-payments-credit-cards
- Auto loan crisis is back in 2025: What should lenders do now? — Prodigal. 2025-02-05. https://www.prodigaltech.com/blog/rise-of-auto-loan-delinquencies-and-repossessions-in-2025
- Car Repossessions Are Up 43%. Here’s What To Do if It Happens to You. — Bankrate. 2024-04-03. https://www.bankrate.com/personal-finance/what-to-do-after-car-repossession/
- CAR REPO CRISIS? What’s REALLY Happening With Auto Loans in 2025? — Kevin Hunter (YouTube, referencing Cox Automotive data). 2025-03-10. https://www.youtube.com/watch?v=htGX3gWs4Js
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