(FixThisNation.com) – An increasing number of Americans are unable to pay their car payments which could be a bad sign for the U.S. economy, especially as inflation continues to affect many household and auto prices remain high.
During the early days of the pandemic, the trillions of dollars the U.S. government provided in stimulus checks to American households and businesses meant that the number of car repossessions had dropped significantly. However, repossessions have now been on the rise as the prices for both used and new vehicles have led to consumers needing to use bigger loans to make their purchases.
In September, the number of auto borrowers who were more than 60 days late on their payments increased by 6. 11 percent. The Fitch Ratings reported percentage marks the highest increase in Americans being behind in payments in three decades. It also is relatively higher than the previous record set in January which was at 5.93 percent.
Despite the high number of people who are behind on their loans, that has not yet to an equal growth in defaults. According to a Cox Automotive report while the number of loan delinquencies has been growing for the last five months the number of defaults actually decreased to 9.8 percent in September. Still, in a yearly base the number of defaults is still at 31.7 percent which is the same as last year.
Cox Automotive expects that there will be an increase in repossessions in the following months and it estimates that around 1.5 million vehicles are going to be seized before 2023 ends. Last year the total number of repossessions had been significantly lower at 1.2 million. Still, this level is still lower that the level of repossessions that was typical before the pandemic.
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