Good for the auto loan industry but bad for the repo guy, auto repossessions fell this year after hitting a record high in 2008. Repo businesses aren’t hurting too bad though. New and used vehicle repossessions dropped from 5.36 percent last year to 5.26 percent through the first half of December 2009.
CNW Research’s data shows that the long-term increase in auto repossessions can be traced to steadily easing credit at both captive and non-captive financial institutions. Auto loan lenders then saw less favorable consumer credit scores, which they knew would lead to an increase in repossessions and car loan delinquencies. An increase in interest rates for consumers with bad credit scores allowed auto loan lenders to counteract the repos.
In 2009, auto loan lenders were picky about who they gave a car loan or lease to, which CNW predicts will continue at least through the first half of 2010. Potential repossessions should drop dramatically, according to CNW Research.
Chart via CNW Research.