Car Repossessions in Memphis Expected to Increase
More people face repossessions in Memphis than in recent years, and experts say to prepare for more repos in the future. What caused this increase, and what can you do about it?
As a Memphis repossession attorney, I know how much car repos can disrupt your life and impact your family. Here’s what you need to know about the rising repossessions in Memphis and how to keep your car if you’re at risk.
Data Shows an Uptick In Late Car Payments
Across the country, car owners face real pressure with rising repossession.
A recent TransUnion study found that in 2022, over 3.3% of car loans were over 30 days late. 1.4% were over 60 days late.
This is the highest rate of delinquency in five years and a huge shift from just two years ago. It means out of the hundred or so cars you see at a busy intersection, a handful of them could face repossession at any moment.
What caused this increase?
Changes During and After the Covid Pandemic
During the pandemic, many people who couldn’t afford their normal monthly payments got some help. For one, stimulus money and increased unemployment benefits offered extra funds to pay car payments.
In addition, the government put a moratorium on other debt collection, including mortgages. Some families chose to put money they would normally spend on their mortgage toward keeping their cars.
Lastly, even car loan providers offered support by temporarily suspending repossessions.
All of these benefits helped families keep up to date with their car payments. However, as those benefits run out and other debts come due, delinquent car payments will likely increase. This will lead to more repossessions in Memphis and elsewhere.
In the next few months, most student loans will come back into play as well, which will likely lead to even higher rates of late car payments.
Limited Supply Means Higher Costs
In the past, if you needed a car for work or school, you could find one on a budget by buying used or from the owner. However, during the pandemic, supply and demand changed significantly.
Now, any decent used car could cost 3x what it did just a few years ago. The average cost of a new car is $48,000 and a used car is over $33,000. That’s a 47% increase in just three years, and it’s simply not sustainable for struggling families.
As a result, many people have a hard time finding something affordable right now. If you’d like to trade in and get something cheaper, you don’t have as many options.
So in order to make money, take care of family, etc, people may decide to take out massive loans they can barely afford. It’s understandable. But doing so puts people in extremely tight situations. In the case of a job loss or unexpected medical expense, they may find themselves unable to pay the monthly bill.
Rising Interest Rates Increase Costs
Car loans are also more expensive because of rising interest rates.
During the pandemic, low interest rates allowed buyers to get auto loans they might otherwise never afford. Now, interest rates on car loans have increased to a whopping 10.6%.
For people with low credit scores, those rates might go as high as 18.2% on a new vehicle and 21.8% on a used vehicle. With such high interest rates, people with really high car payments don’t have a lot of options to lower their monthly payments. Even if you’re willing to drive a clunker, you might not be able to afford it.
Stop Repossessions in Memphis and Save Your Car
In this kind of financial climate, car loan providers don’t really have a reason to work with you. Creditors want your car. After all, they can clearly get a lot of money for it if they get it back from you.
If you want to keep your car safe from the threat of repossession, you should consider bankruptcy. Our Memphis bankruptcy attorneys have worked to stop repossessions in Memphis for over thirty years. We’ve helped thousands of people keep their cars and get on with their lives.
That’s thousands of people who can get to work, take their loved ones to the hospital, and get their kids to school, all without worrying someone could come in the night and take their homes.
If this interests you, we offer a free consultation to help you figure out your options. No strings attached and no pressure.
Contact us today at 901-327-2100 for your free appointment, or use the form on this page. We look forward to helping you!