Cars are getting more expensive. Since March 2020, new car prices are up 29% and used car prices up 34%, per USA Today. This outpaced the overall inflation rate of 23%.
There are a few potential reasons for this. To start, supply chain issues during the pandemic resulted in a semiconductor shortage that made car manufacturing difficult. However, as noted by Bloomberg, even with these supply chain issues resolved, “car companies have been slow to replenish their inventories, not least because elevated prices help them notch big profits.”
As these prices increase, more drivers are taking to the internet to share their gripes about high car costs, both at the time of purchase and through related costs like repairs and insurance. For example, one internet user claims she was offered a 19% interest rate while shopping for cars. Another claimed that she caught a dealership charging $800 for a simple repair, and a further internet user declared her shock after discovering it was cheaper to use rideshare services than own a car.
Now, a user on TikTok is claiming that these high car prices have had consequences in the car market.
Why are there so many repossessions?
In a video with over 769,000 views, TikTok user Yusuf (@ridewithyusuf) shows a lot of cars that appear to be relatively new.
“Look at this. All these are repos, all brand new cars,” he says. The cars include vehicles from Mercedes, Range Rover, and more.
“Guys, these aren’t, you know, 2010, 2012. These are 2019s, 2020s and up that are getting repo’d,” he adds.
“People barely had these cars for a year, maybe less, maybe more. And the banks are picking them up and selling them at the auctions for a fraction of what they bought it for,” Yusuf states. “Shows you how cooked the car market is with all these high-interest loans. People bailing out of their auto loans because they can’t even afford it.”
As for why this is happening, Yusuf says that “people just don’t know how to educate themselves, budget correctly,” and as a result, “dealers are taking advantage of that and marking up these cars at such an alarming rate—and banks are approving these loans.”
For those who are currently in need of a car, the TikToker suggests that a buyer “take your time to educate yourself and make sure you budget correctly.” However, to him, the amount of repos in the lot indicates that the market is “in trouble.”
Have car repos really gone up?
In short, yes, it’s true that car repossessions have gone up substantially in recent years.
“According to a July 2024 Cox Automotive report, car repossessions are up 23% compared to last year, which is also 14% higher than the 2019 pre-pandemic levels,” reads a piece in CNBC.
“When you think about the costs for rent and shelter and insurance, all those things hit consumers and they have to choose what they will pay,” Jeremy Robb, senior director of economic and industry insights at Cox Automotive, told Bloomberg. “More people are getting behind on payments because everything is more expensive.”
The Bloomberg piece goes on to say that average interest rates mean that “monthly bills are now $739 for a new car and $549 for a used car on average.”
@ridewithyusuf Car Market is getting bad! Car prices need to crash or correct even more! Repossessions are crazy right now! #cardealer #cars #fyp #carmarket #carrepo #repo #auction #newcar #wholesale #cartok #marketcrash #carmarketcrash #dealership #dealershiptiktok ♬ original sound – Ride With Yusuf
Commenters share their thoughts
In the comments section, many users griped about the high prices of not only cars, but the things they need to purchase alongside their vehicles.
“Insurance is too high.. people are scared to buy another car due to insurance,” wrote a user. “almost trippled in california.. going up every six months for no reason.”
“Problem is everything is increasing except our pay. Car insurance keeps going up every 4 months or so cause they feel like it. I went from 400 month to 1000 on a couple cars,” echoed another. “Crazy. No one can keep up.”
“That’s why I’m driving my rusty POS apart 2012 Equinox until the wheels falls off bc not having a payment is great,” declared a third.
The Daily Dot reached out to Yusuf via email and Instagram DM.
Update 2:50pm CT Sept. 16: In an Instagram DM exchange with the Daily Dot, Yusuf Benallal says the problems began during the COVID pandemic.
“I think a lot of us started to see this uptick during the Covid pandemic and banks allowing their underwriters to lend way past the limit of a vehicle loan, which is typically 110-120 loan to value—but back then they did 200% plus loan to value, coupled with high interest rates and car insurance that has been steadily rising in costs,” he explained. “Most people can’t afford their car anymore so either they wait until the bank gets it or they call the bank to give it up.”
That said, he noted that “as a buyer there are plenty of incentives and rates bonuses that people can take advantage of, especially now since car inventory is increasing and sales are decreasing because people are finding it hard to get out of there COVID car that was inflated as far as purchase price and interest rate, especially subprime.”
Issues like these, he says, are part of the reason he started his social media page.
“My goal, even though I’m a car dealer, is to help educate people [about] what goes on behind the scenes, and also educate people on financial literacy and vehicle purchasing literacy,” he stated. To that end, Benallal, who co-owns and manages a car dealership in Charlotte, Atlanta and Miami, says he is launching a startup called Carlay that “will help make car deals and vehicle servicing more transparent” and “will allow consumers to feel more confident in their car buying or car servicing experience.”
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