The private debt crisis is becoming apparent in America after car repossessions jumped 23% during the first half of 2024. Data shows that 1.6 million Americans will have their car repossessed by the bank before the end of the year, a slight increase from the 1.5 million autos repossessed in 2023 and a drastic upturn from the 1.1 million in 2021.
Obviously, the cost of purchasing a car have drastically risen with inflation, interest hikes, and supply chain shortages. Americans simply cannot afford new autos and car dealerships can do nothing to entice purchases. New car inventory in the US rose 36% this year, close to February 2021 levels before the supply chain crisis put a dent in imports. Yet, the average list price of a new car is $49,096 and far more than the average American can afford. The average new vehicle will sit in a dealer’s lot for 65 days, a 41% annual increase.
Dealerships are hardly asking for a downpayment these days unless someone has horrid credit. Even putting a few grand down will only take off about $20 per monthly payment. The average new car costs about $735 monthly based on data from Experian, and $523 monthly on used models. The average American simply is not educated in finance. Autos are behind mortgages in the largest share of personal household debt and there is a portion of the population who do not understand what they can actually afford.
The average American now borrows around $40,634 for new vehicles and $26,073 for used vehicles. About 9.2% of all consumer debt is through autos alone.
There was that viral story from April of a woman purchasing a Chevy Tahoe for $80,000 – without factoring in the interest on all household vehicles. Her husband purchased 2020 GMC Sierra 1500 AT4 for $78,000 in August 2022 and she simply could not understand why the payments on the truck were more than on the Tahoe. Well, the husband’s 14% rate on the vehicle placed their monthly payment or the truck $1,600. I recalled reading comments suggesting the family simply let the bank repo one of the cars as if that could be a valid option for personal finance.
Cox Automotive believes the trend of repossessing cars will increase into 2025 when they anticipate. 1.7 million cars being repossessed. As of Q1 2024, US household debt stood at $1.77 trillion; $12.44 trillion held in mortgage debt, $1.62 trillion in autos, $1.12 trillion in credit card debt, and $543 billion in other forms. Bank of America, Citigroup, Goldman Sachs, and others recently reported a stunning $4,139,000,000 loss in unrecoverable debt.
The banks will come after their assets if a payment is missed, with some only waiting 30 days after a missed payment to seize property. They may then ask for full payment to return the car which is simply not happening in these situations. While there are some who cannot compute their monthly payment, others are now living paycheck-to-paycheck and are one large bill or missed paycheck away from losing their shirts. Then we have agencies telling the public across Build Back Better nations that they will soon need to purchase an EV to adhere to the climate emergency. Cheaper alternatives from China have been slapped with 100% tariffs, and there are no alternatives. Governments are do nothing to assist this growing problem as the ultimate goal is to eliminate private car ownership under the premise of the Great Reset.
