By Lauren Fix
A growing number of drivers are falling behind on their car payments, a trend financial analysts fear will continue, it is a sign reflective of soaring car prices and prolonged inflation having an effect on household budgets.
In recent months, the number of people behind on their car payments has been approaching new levels, and for the lowest-income consumers, the rate of loan defaults is now exceeding where it was in 2019, according to data from ratings agency Fitch.
Industry analysts worry the trend is only going to continue into 2024 with economists expecting unemployment to rise, inflation to remain relatively high, and household savings set to dwindle. At the same time, a growing number of consumers are having to stretch their budgets to afford a vehicle. The average monthly payment for a new car is up 26% since 2019 to $718 a month, and nearly one in six new car buyers are spending more than $1,000 a month on vehicles. Other costs associated with owning a car have also shot up, like insurance, gas and repairs.
These repossessions are occurring on people who could afford that $500 or $600 a month payment two years ago, but now everything else in their life is more expensive,” per Edmunds. “That’s where we’re starting to see the repossessions happen because it’s just everything else starting to pin you down.”
Getting your car repossessed is one of the most frustrating things to deal with as a driver. This typically happens when you default on your loan and stop making the payments. Once your car is repossessed, the lender will typically sell it at auction to recoup their money.
While it can be a tedious process, it’s possible to get your vehicle back after a repossession. Just remember that you must act quickly. In this article, we’ll explain how you can get your car back after a repossession so you don’t lose the car you love or need.
The simplest way to get your repossessed vehicle back is to pay off the outstanding balance. That means paying off the entire car loan balance in full, in addition to collection and car repossession costs, such as the labor and tow truck charges. Most lenders also have late fees you must pay. Once you complete these steps, the vehicle will be returned to you and you’ll own it outright, eliminating the possibility of car repossession in the future.
Car repossession happens when you default on the loan, so you can get the car back by reinstating the loan. That means you’ll catch up on your loan payments, so you no longer have an outstanding balance. However, this also requires covering any late fees and repossession costs.
It’s normal for people to store personal items in their vehicles, but repo companies don’t wait for you to clear them out before taking your vehicle. You can get your personal property back, but you’ll have to jump through a few hurdles first. Here’s how you can retrieve the personal belongings that were in your car at the time of repossession.
Before you reach out to the repossession company, learn about the state laws around reclaiming items from a repossession company. It’s not uncommon for these repossession companies to charge “storage fees” before they’ll allow you to get your personal property back. In some cases, this is illegal, so make sure they’re abiding by your state’s regulations.
When you’re ready to get your stuff back, contact the repossession company and schedule an appointment to do so. Meeting them for this appointment will allow you to go through your vehicle and grab everything that’s your property and not considered part of the vehicle. Check the items for damage, as well.
If any of your items have sustained damage, it’s on the repossession company to cover the cost of it. In addition to items inside the vehicle, this includes property damage that occurred during the repossession process. For example, if the repo agent damaged your mailbox or garage door in the process of taking your vehicle, they are responsible for the cost of repairs.
The easiest way to deal with repossession is to prevent it from happening in the first place. Being proactive is the best way to keep your vehicle firmly in your possession and avoid hurting your credit.
If you’re having trouble making your loan payments, reach out to your lender to see what kind of options they’re willing to offer. Sometimes, lenders will give you a relief period to get your finances in order before having to make a car payment again. They might even modify your loan terms and put you on a new payment plan to better suit your current financial situation.
Lauren Fix, The Car Coach®, is a nationally recognized automotive expert, analyst, author, and television host. A trusted car expert, Lauren provides an insider’s perspective on a wide range of automotive topics and aspects, energy, industry, consumer news, and safety issues.
Lauren is the CEO of Automotive Aspects and the Editor-in-Chief of Car Coach Reports, a global automotive news outlet. She is an automotive contributor to national and local television news shows, including Fox News, Fox Business, CNN International, The Weather Channel, Inside Edition, Local Now News, Community Digital News, and more. Lauren also co-hosts a regular show on ABC.com with Paul Brian called “His Turn – Her Turn” and hosts regular radio segments on USA Radio – DayBreak.
Lauren is honored to be inducted into the Women’s Transportation Hall of Fame and a Board Member of the Buffalo Motorcar Museum and Juror / President for the North American Car, Utility & Truck of the Year Awards.
Check her out on Twitter and Instagram @LaurenFix.
