The pandemic has turned the auto industry on its head. In the good old days, cars depreciated the moment you drove them off the lot. The only used cars that lost value in June were between eight and 13 years old. Due to the shortage of new cars, the used car market has been inflated like never before.

The average price of a used car in today’s market is $10,000 more than normal. In June 2022, used vehicles were selling for about $33,341, and “nearly new” cars under three years old were listed 1% more than the month prior, at $42,314. In fact, nearly new cars are now selling for about $13,145 above typical price points.

With major price increases, the used car market hasn’t eased up as much as consumers had hoped. However, the repossession of vehicles has doubled, and the

Federal Reserve raised interest rates in hopes of curbing inflation.

These new trends will hopefully ease demand for new and used cars, and bring back more reasonable auto prices. According to

CBS News

, “If demand falls due to higher borrowing costs while supply increases as repossessed cars are resold, that could result in lower prices on car lots.”

MORE: The Chip Shortage Is Leading to Some Big Changes With VW Models

Let Jerry find your price in only 45 seconds

No spam · No long forms · No fees

Find insurance savings

Used cars: repossession

Imagine returning from a wonderful vacation, only to find that your vehicle housed in long-term parking had vanished. If you’re behind on your car payments, this could easily happen to you.

Before the pandemic, lenders and auto dealers were more lax about retaking cars when borrowers fell behind on their payments. It was also difficult to find and repossess the vehicles in the first place, not to mention losing out on recouping costs.

But after the world shut down in 2020, global supply chain shortages and lack of computer chips led to an unprecedented rise in auto prices. Government surveys indicate that used trucks and cars increased by 43% in June from August 2020. Over the same time, new vehicles increased by 17%.

During the early phases of the pandemic, auto reps were down, and lenders gave borrowers breaks where they could. Now, dealers move fast to repossess automobiles so they can resell them quickly, even at a significantly higher price. Due to new tracking technology, it’s also easier for dealers to locate your vehicle.

A Florida repo man, Mark Lacek, has recovered over 10,000 autos since the ‘70s. Lacek expects the trend to continue to grow, as technology has streamlined finding repo automobiles. Small groups patrol the streets with license-plate-reading cameras mounted on their cars, looking for vehicles in the repo database.

By law, any proceeds that exceed the loan recovery amount for repossessed vehicles must be given back to the borrower. Some borrowers were even paid thousands of dollars after their autos were repossessed and sold off at an auction.

Inflation and car loan delinquencies

Without stimulus checks and unemployment payments, Americans’ are feeling the strain on their checking and savings accounts. For many young and subprime debtors, consumer car loan delinquencies are starting to ramp up. Compared to May 2021, the number of auto loans more than 60 days late rose by 30%.

Currently, U.S. consumers have $1.4 trillion in auto loans, which is double the amount from 10 years prior. Believe it or not, it also surpasses

credit card debt

The average used-car payment today is over $500 per month and about $650 for new vehicles. Some Americans are even paying over $1,000 per month. That’s a whole month's rent!

With a looming recession and used car prices still on the rise, it’s best to hold off buying your next ride. But if you’ve got a used car to sell, have at it. It’s a seller's market, and for now, it’s here to stay.

Are you overpaying for car insurance?

Compare quotes and find out in 45 seconds.

Try Jerry