The automobile repossession rate in the U.S. is so high that it recently prompted a U.S. Senator to open an investigation into the auto lending market. Repossession rates have been higher just once in the past 30+ years–at the outset of the Great Recession. It’s estimated that approximately 3 million automobiles were repossessed in 2025.
Obviously, losing your vehicle can have a big impact on your life. Suddenly finding yourself without transportation can make it impossible to get to work, creating a vicious financial circle–you can’t earn money and pay for a vehicle if you have no way to get to your job. Loss of a vehicle can also complicate getting kids to school and extracurriculars, keeping up with medical appointments, and even shopping for groceries.
Auto Loans in 2025-2026
According to the Household Debt and Credit Report for Q4 of 2025, auto loan balances climbed by $12 billion during that three-month period.
Auto Loan Delinquencies in Late 2025
Just under 8% of outstanding auto loan debt transitioned to delinquency–30+ days past due. That’s on the heels of 8% transitioning in the previous quarter. Another 3% transitioned to serious delinquency–90+ days past due.
Though auto lenders typically reserve the right to repossess a vehicle any time a payment is late or falls outside a grace period, that’s not a common practice. It’s expensive and time-consuming for the lender to repossess a vehicle, and there’s a chance they’ll never get full payment of the outstanding debt. So, most allow a little time to see whether the borrower will start making payments again. At the 90 day mark, though, most lenders will be pursuing repossession.
Car Loan Originations in Late 2025
The aggregate outstanding balance on auto loans increased in Q4 of 2025, but by less than in the previous quarter. About $70 billion in new auto loans went to borrowers with credit scores of 760+, and another $60 billion to those with credit scores between 660 and 759. The average credit score for the lowest quintile (the bottom 20%) of those granted new auto loans in Q4 was 560+. In other words, it was tough to get a loan on a new or used car with a sub-560 score.
It’s always been harder to buy a car with a low credit score. But in 2025, the subprime market–the lending market for those with lower credit scores–became unpredictable. One major subprime lender with a large presence in California filed for bankruptcy in 2025 and ceased operations. Standards for subprime borrowing appeared to be tightening, but then loosened slightly near the end of the year. And, of course, interest rates remain elevated.
Auto Pricing in 2026
New car prices hit an all-time high in 2023. Though there have been some minor fluctuations, they remain near that level. Several factors have impacted the price increases, including lingering pandemic-era supply chain issues, tariffs, inflation, a shortage of nearly-new used vehicles due to reduced production during the pandemic, and a trend toward production of larger, more expensive vehicles.
In turn, the high cost of new vehicles has impacted the cost of used vehicles. Though used vehicle prices have come down slightly since their peak in 2022, limited supply and other factors have kept prices far above pre-pandemic levels.
Auto Interest Rates
In addition to the high cost of the vehicle itself, the cost of purchasing a new or used vehicle on credit has increased. The average rate for a new auto loan in late 2025 was just over 7.5%, compared with about 5.2% just before the pandemic. Depending on the price of the vehicle and the length of the loan, that could mean paying thousands more for your vehicle.
It’s a Bad Time to Lose Your Car to Repossession
With the loan market uncertain, inventory low, vehicle prices high and interest rates high, it’s a very bad time to be forced into searching for a vehicle on short notice. If you’re facing repossession, bankruptcy may save your vehicle. In fact, if your car was just repossessed and you act quickly enough, bankruptcy may allow you to take the vehicle back.
Chapter 13 Bankruptcy May Be a Solution
There are a few advantages to filing for Chapter 13 bankruptcy when it comes to helping out with a bad car loan. First, a borrower can force the lender to take payments over a five year period of time. In many cases this will lower the monthly payment and reset the loan – eliminating the need to cure missed payments. Second, Chapter 13 may allow a borrower to reduce the loan balance to match the current value of the car. This is very helpful when a borrower owes much more than the car is worth. In both of these cases a borrower can also reduce the interest rate if the borrower got stuck with a high interest rate because of their credit history. Most importantly, as soon as a car owner files, the automatic stay provision of the Bankruptcy Code prevents any lender from repossessing the car without court approval. This provides much needed time to reorganize on the loan.
To learn more about how bankruptcy may help you keep your vehicle, schedule a free consultation with one of our experienced Los Angeles bankruptcy lawyers right away. Just call 877-439-9717 right now or fill out our contact form.