
The Consumer Financial Protection Bureau published a report showing that the rate of auto repossessions at the end of 2022 surpassed pre-pandemic levels. Additionally, lenders were increasingly more likely to use third parties, called forwarders, to manage the repossession process. The use of a third party generally increases consumer costs. The CFPB analyzed data from nine major auto lenders covering accounts with activity between 2018 and 2022. These numbers show increasing consumer risk in the $1.64 trillion auto loan market.
“Supply chain shocks and higher interest rates drove up costs to purchase and finance a car,” said CFPB Director Rohit Chopra. “With outstanding auto loans exceeding a trillion dollars, it’s critical that borrowers can avoid the costly consequences of repossession.”
Auto loans represent one of the largest sources of consumer credit outside of mortgage lending, with more than 100 million active auto finance accounts and $63 billion in new monthly originations as of April 2024. When vehicles are repossessed, consumers often lose their primary transportation to work, may be required to repay outstanding balances plus repossession fees, and may see additional negative impacts to their credit scores.
Key findings in the report include: