12/26/2025
I can attest to this happening. As a divorce attorney, we have to calculate equitable distribution of assets. Cars are assets. In the past, the parties equalized the equity of their cars and usually there was some equity in each car above the remaining balance of the car loan. For the past several years, I have been seeing the opposite. Most of the cars are underwater, so to speak.
The Car Repossession Numbers Are Screaming a Warning Most People Are Ignoring.
During the 2008–2009 Global Financial Crisis, about 1.7 million vehicles were repossessed in a year.
That was considered catastrophic.
Today, auto repossessions are already back at — and in some measures above — pre-GFC levels, and they’re still rising.
This isn’t a prediction.
It’s already happening.
What changed?
During the COVID years, car prices exploded.
Supply chains broke.
Stimulus checks hit bank accounts.
Interest rates were near zero.
People didn’t buy cars.
They overpaid for them.
Used car prices jumped over 40% at the peak.
New cars stretched into 72- and 84-month loans.
Monthly payments quietly crept toward $700+ for the average new vehicle.
And here’s the trap most people fell into:
Cars depreciate.
Debt doesn’t.
Millions of borrowers who took out loans in 2021–2023 are now underwater — owing more than their car is worth.
That’s the danger zone.
Once a borrower is underwater:
• Refinancing is impossible
• Selling doesn’t clear the debt
• One missed paycheck becomes a crisis
Now layer in reality.
Interest rates are higher.
Insurance costs are up.
Repair costs are up.
Fuel costs fluctuate.
And here’s the part few analysts talk about:
For most Americans, the car isn’t optional.
Roughly 3 out of 4 workers commute by car.
Lose the car, and you don’t just lose transportation.
You lose income.
That’s why auto repossessions matter more than housing defaults in the early stages.
Car repossessions hit first, because:
• Loans are smaller
• Lenders act faster
• There’s no political protection
• Borrowers have less equity
Auto credit is the canary in the coal mine.
When car payments fail, credit cards follow.
When credit cards fail, rent and mortgages come next.
That’s how stress moves through the system.
Quietly.
What we’re seeing now isn’t reckless spending.
It’s payment fatigue.
People didn’t suddenly become irresponsible.
They got locked into:
• Inflated asset prices
• Long-term debt
• Rising living costs
• Flat real wages
This isn’t a moral failure.
It’s a structural one.
And this is exactly how financial crises begin in modern economies:
Not with panic.
With normalization.
People miss a payment.
Then two.
Then the repo truck shows up.
No headlines.
No bailouts.
Just consequences.
My rich dad used to say:
“When people lose mobility, they lose options.
When they lose options, they lose freedom.”
That’s why I watch consumer credit more closely than stock prices.
Stocks can stay irrational longer than people can stay solvent.
Auto repossessions aren’t the crisis.
They’re the signal.
The signal that debt has finally outrun income.
And once that happens, the system doesn’t break all at once.
It breaks one car…
one borrower…
one household at a time.
That’s how you know the pressure is already here — even if the headlines haven’t caught up yet.
