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So far this year, car repossessions are up 23% compared with the same period last year.
What Happened: According to Bloomberg, citing data from Cox Automotive, vehicle repossessions began increasing in 2023. They’re up 14% from the first half of 2019, exceeding pre-pandemic levels.
Vehicle seizures, which usually happen after three months of missed car payments, fell during the pandemic. Recall how lenders became more lenient and stimulus checks boosted borrowers' finances.
Also Read: How Are BYD, Xiaomi And Nio Boosting Car Sales?
But the Federal Reserve’s refusing to cut interest rates have led to heftier car payments. The average interest rate for a new car is currently 7.3% and 11.5%, according to Edmunds data.
As a result, the average monthly car payment has reached $739 for a new car and $549 for a used car.
The percentage of subprime auto borrowers who were at least 60 days late on their bills in June was 5.62%. That’s down just slightly from a record in February, according to Fitch Ratings, Bloomberg reported.
The Fed is expected to begin lowering its key interest rate ranging from 5.25% to 5.50% in September as inflation shows signs of cooling, a move that could give borrowers the chance to refinance or buy something else.
Price Action: Credit Acceptance Corporation (NASDAQ:CACC), a Michigan-based auto finance company, rose 3.89% to $607.72 by late-afternoon trading on Tuesday.
Exchange-traded funds (ETFs) that track Credit Acceptance also trended upward.
SRH U.S. Quality ETF (NYSE:SHRU) gained 0.61 as IQ Candriam U.S. Mid Cap Equity ETF (NYSE:IQSM) moved up 0.33% and RiverNorth Patriot ETF (FLDZ) improved 0.20%. Schwab Fundamental U.S. Small Company ETF (NYSE:FNDA) jumped 2.94% and John Hancock Multifactor Small Cap ETF (NYSE:JHSC) picked up 2.63%.
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