More Americans are struggling to keep up with their car payments. Auto loan delinquencies have risen above pre-pandemic levels after hitting record lows during COVID — and more borrowers are now facing defaults and repossessions.
A recent report from the Recovery Database Network (RDN), says more than 2.5 million cars were repossessed last year, and this year is on track to hit 3 million, the most since 2009 (1).
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This pattern of rising auto loan delinquencies and repossessions often appears when household budgets are under strain. Auto finance is a significant slice of consumer credit, with more than $1.6 trillion in balances across over 100 million active accounts (2). (Compare that to $13.07 trillion for mortgages, $1.65 trillion for student loans and $1.23 trillion for credit cards.)
When times get hard and consumers tighten their belts, the first payment they postpone is on their credit card, and the last one is on their home. Auto loans fall somewhere in between.
But how worrying is the rise in delinquencies and repossessions? Is this a signal that the larger economy is falling apart, or is it a symptom of something else?
The case for an imminent recession
A report by the Consumer Federation of America says that “auto loan default rates … are climbing at rates that mirror the years immediately preceding the Great Recession (3).” It’s becoming clear that the economy is slowing down as hiring and spending have softened since late 2024.
In August 2025 the BLS counted only 22,000 new jobs and a 4.3% unemployment rate, and jobs from 2024 were revised down to 911,000 (4). The “Sahm rule,” an index the St. Louis Fed uses to track the probability of a recession based on how fast unemployment is rising, flipped to recession-on briefly last year, and has hovered close to recession territory in 2025.
Adding fuel to the argument that we’re headed to recession, the Conference Board now projects real GDP growth of 1.6% in 2025, down from 2.8% in 2024 (5). Add slipping consumer expectations and you have a recipe for economic contraction in the new year.
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The case against a recession
Not all indicators point to a current or imminent recession, however. Recent New York Fed readings show the transition from short-term delinquencies — those who are late on a payment but send in the check within a month or two — to people who are more than 90 days delinquent on a loan is holding fairly steady (6). Though more people appear to be feeling economic stress than at any time since the Great Recession, so far that hasn’t tipped households into giving up on paying their debts.
The last time repossessions peaked was during the fallout from the housing bust in 2009. That spike was part of a wider credit collapse, with soaring unemployment and collapsing home prices. Today’s rise in repos sits in a different context. In the period just before the 2008 financial crisis, Americans’ debt-to-asset ratio was much higher. Currently the ratio is at a 50-year low. A booming stock market for the last five years and increased savings have created a cushion for many car owners.
Steps to take now to avoid repossession
Affordability has become an issue for car owners, however. According to Kelly Blue Book, the average price of a new car in September 2025 was $50,080, the first time that number has gone above $50,000 (7). In addition to price inflation, consumers have had to deal with higher interest rates since 2022, and research links high monthly payments to greater delinquency risk.
Paying for upkeep on your existing car has also gotten far more expensive since 2020. From 2020 through mid-2024, the CPI measure for motor-vehicle insurance rose about 54%, making it one of the fastest-rising household expenses (8).
The best strategy for avoiding car repossession is to not buy more car than you can afford. That includes the sticker price as well as maintenance and insurance. Sometimes circumstances beyond your control get in the way, however, and payments become difficult to manage. It’s possible to refinance a car loan to try and get a lower payment, but that may be difficult if you bought your car before interest rates spiked in 2022.
If you think you may miss a car payment, or you’re already behind, contact your lender to ask about hardship programs, payment extensions, or moving the due date to match your paycheck. You may also be able to save money by shopping around for a different insurance company.
If your car is repossessed, ask for a complete accounting of fees and the sale, and confirm you received required notices. It is possible to negotiate your deficiency balance or set up a payment plan. For the most part, banks would rather you find a way to keep making payments rather than write a loan off their books. But be sure to keep records of all your communications with the bank so you can document agreements and timelines — just in case.
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Recovery Database Network (1); Federal Reserve Bank of New York (2, 6); Consumer Federation of America (3); Bureau of Labor Statistics (4); Conference Board Leading Economic Index (5); Kelly Blue Book (7); NPR (8)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.