Auto Loan Defaults and Repossession at Historic Lows
Last week, the House Financial Services Subcommittee on Consumer Protection and Financial Institutions held a hearing with several advocacy groups and coalitions to examine policy options to help consumers through the pandemic. Several panel witnesses indicated that there has a been an increase in collection activities associated with vehicle repossessions. This simply is not true.
According to Cox Automotive analyzed Equifax auto loan data and found auto repossessions are near historic lows with auto loan defaults rates down 23% in 2020 to 1.6 million from a decade-high 2.1 million in 2019. Furthermore, the default rate in 2020 was the lowest in at least 15 years.
Just as Washington has provided comprehensive support and economic relief to millions of American households affected by the COVID-19 pandemic through direct deposit payments and enhanced unemployment benefits, among many supplemental benefits, auto lenders have also directly helped consumers during the pandemic.
Vehicle lenders developed payment-relief programs through auto loan accommodations, such as loan and lease modifications, extensions, and suspended repossessions for customers. Last summer, auto lenders provided more than seven million auto accounts with auto loan accommodations nationwide, including more than 14% of subprime accounts and 10% of nonprime accounts.
Cox Automotive also estimates approximately 1.3 million vehicle repossessions in 2020, which is down considerably from an estimated 1.7 million vehicle repossessed in 2019 (around a 23% decrease). During the Great Recession in 2009, estimated auto repossessions totaled 1.8 million.
Undoubtedly, auto loan defaults and repossessions have remained low because of federal assistance and auto loan accommodations developed by auto lenders for their customers. This unique combination of public and private support has helped millions of individuals, especially those who may have recently lost their jobs or had a reduction in wages, maintain their vehicles.
The health and economic disruption caused by the pandemic cannot be underestimated. Access to affordable transportation and credit is essential for everyday American life. AFSA and its member companies have taken important steps to assist and provide relief to millions of families during this challenging time.
If you have any questions, please contact the AFSA Communications team at firstname.lastname@example.org.
March 17th, 2021 by Dan Bucherer