Car loans
are getting more and more expensive these days, just like the price of cars themselves. Despite that fact, consumers continue to purchase cars at a high pace. But could the growing cost of securing a loan cause problems for borrowers down the road? Car sales continue to surge despite high prices
You've surely heard by now that car prices have been steadily increasing over the past few years. Kelley Blue Book
reports, in fact, that the average used car price in January was over $27,000--an increase of 29 percent over the previous year. Used car prices have surged in large part because of the severe shortage of new cars available for consumers, thanks to supply chain challenges brought about by the pandemic and other issues.
Despite these prices, consumers have continued to purchase vehicles. Experts believe that consumer willingness to make purchases despite the high prices has been influenced by recent low-interest rates.
Car loan payments have been increasing for years
MORE: How to Safely Buy a Used Car
Even though interest rates have been relatively low of late, that doesn't mean that consumers have had an easy time paying off their loans. That's because thanks to the sky-high prices of cars, car buyers are now having to make higher payments on their loans for a longer period of time.
The high prices on vehicles have led dealers to offer longer repayment options in order to make the cars accessible to a larger number of people. Experian reported recently that the number of car buyers locking in a loan with a repayment period of 72 months or more is at an all-time high.
High car loans could lead to a wave of repossessions
The combination of high loan payments and high used car prices has some watchdog agencies worried about the potential consequences for borrowers, particularly if they have the misfortune of dealing with an unscrupulous lender.
In the past, lenders would typically offer a grace period if a borrower fell behind on payments, allowing them to catch up before their vehicle was repossessed.
These days, however, the calculus has changed for many lenders, who now may see an opportunity to take advantage of high used car prices. There's fear that they could begin repossessing vehicles quickly in order to resell them for even more than was paid to begin with.
In fact, this isn't an entirely hypothetical fear. The Consumer Financial Protection Bureau has already received reports of lenders violating their own grace periods as well as borrowers' rights in order to try to repossess and sell cars quickly.
The CFPB has also received complaints about lenders charging fees for the return of items that had been left in repossessed vehicles.
Though the increase in illegal repossessions hasn't been large at this point, the CFPB is keeping a careful lookout because they expect the problem to get worse before it gets better.
Insure your car with Jerry
If you've recently taken advantage of low-interest rates to purchase a car, you'll need to make sure that you get it properly insured. If you're like many people, though, you're not exactly looking forward to shopping around for different policies.
The good news is that now there's an app that can help: Jerry
. Jerry quickly compares quotes from dozens of companies in just seconds, helping you hone in on the best deal. And once you've done that, Jerry will keep assisting by checking up on competing offers every six months, so you can rest assured that you're not overpaying for your policy. 
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