US Car Repossessions Surge Signals Deepening Financial Woes for Households and Lenders

The American vehicle repossession industry stands on the brink of historic activity, with car seizures reaching their highest level in 14 years. According to Recovery Database Network data, 2.7 million vehicles were repossessed in 2024, and projections suggest the number could approach three million by year end—nearly matching the recessionary peak of 2009.

This sharp increase reflects mounting hardship for lower and middle income families across the United States. High interest rates, which climbed from 0.25 per cent in 2022 to a peak of 5.5 per cent last year and currently stand at 4 per cent, have placed tremendous financial strain on households. Overall household debt is at a record high of 18.4 trillion dollars, with car loans accounting for 1.6 trillion.

Repossession professionals report their industry is working overtime. Assignments—jobs from lenders to recover vehicles—surpassed 9.6 million in 2024, exceeding the worst levels of the last financial crisis, and are expected to hit 10.5 million assignments by the end of 2025. Lenders are increasingly desperate, at times issuing multiple assignments per vehicle to different companies in an attempt to recover more of their losses. Still, only about a third of the targeted vehicles are tracked down and seized.

Delinquency rates on subprime loans have reached record highs, spelling particular trouble for borrowers with weaker credit backgrounds. This sector is under intense strain: Californian subprime lender Tricolor collapsed amid allegations of fraud, and Texas-based PrimaLend Capital Partners sought bankruptcy protection. As losses from bad auto loans mount, smaller lenders are retreating from the market.

The consequences of this trend are felt keenly at the household level. For many, losing a vehicle equates to losing their means of getting to work or supporting their families. Repossession also devastates credit ratings, making financial recovery even harder. The toll is not confined to the less affluent; repo agents observe increasing numbers of luxury vehicles among those recovered, signalling that pressure is spreading to wealthier households as well.

Risks are mounting for the broader economy as well. Lenders typically recoup little on repossessed vehicles, while borrowers face escalating financial difficulty. The sector’s challenges are exacerbated by a shortage of skilled agents following a post-pandemic exodus, and the dangerous nature of the work—agents regularly face threats and violence, with seven killed on the job in 2022. Despite a small uptick in the recovery rate this year to 31 per cent, it remains well below the 41 per cent seen in 2018.

Car repossessions remain one of the earliest warning signs of wider financial trouble. Industry leaders warn that the current spike could presage a recession deeper than that of 2008 and 2009, as distress spreads across all income brackets and the economic aftershocks ripple throughout the lending system.