According to Fitch Ratings more, Americans are falling behind on their car payments after a sharp decline in the midst of the pandemic when a surge in used car prices and low-interest rates on new cars had buyers taking out bigger loans.
In May 2021, the number of subprime borrowers at least 60 days behind on their car payments hit a seven-year low of 2.58 %. Now, with inflation, high gas, and job cuts, in December 2022, the number more than doubled from that low hitting 5.67 %.
Personally, I'm seeing clients struggling with very high payments. Until about a year ago, payments of $400 or $500 dollars a month would be common. Now, it's not uncommon to see payments of $700 and $800 a month- and these aren't luxury cars - just standard transaportation.
If you are falling behind in car payments, first reach out to the lender to try to make arrangements and get it in writing if they agree.
If a finance company will not help, you may want to consider a Chapter 13 bankruptcy filing because that does give you protection from repossession, and we may even be able to get more favorable fiannce terms and a lower payment. Further, chapter 13 can help you get the car back AFTER it is repossesed. But you have to act fast after the lender takes back the car - once they sell the car at auction, you can no longer get it back.