DEKALB COUNTY, Ga. — The number of car repossessions is growing. The latest numbers show people are defaulting on car loans 40% more than just two years ago.
Channel 2 consumer investigator Justin Gray has been digging into this and was live in DeKalb County for Channel 2 Action News at 5:00.
Under Georgia law, if you miss a car payment, the creditor has the right to seize a vehicle at any time and without notice. But there are things you can do before it gets to that.
Nevadia Brooks could only watch as her Nissan Altima was repossessed. “It was three o’clock in the morning,” she said.
“He kept up his end. They just wanted their car back,” said Kimberly Carson.
Her 20-year-old son woke up to find his 2010 BMW with a 34.9% interest rate had been hauled away.
“He was just trying to establish his credit, get a car and make a life for himself,” she said.
Data from Cox Automotive shows the highest rates of auto loan defaults since the aftermath of the 2008 financial crisis.
“Car repossession rates have increased by 43%, which is astronomical when you consider the fact that most Americans rely on their cars to get to and from work and pay for their everyday necessities,” said Shannon Martin of Bankrate.
She says the rising cost of car insurance for new and old cars, as well as the rising costs of other household goods, are all putting the squeeze on car owners.
“The most common response to financial crisis is to ignore it and hope it goes away. And that’s what you do not want to do in this situation,” Martin said.
Instead, she recommends reaching out to your lender when you know you can’t pay to see if they may offer a refinancing plan or extension.
And Channel 2 consumer adviser Clark Howard says before it ever gets to that point, consumers should shop around their car loans for a potential refinancing somewhere else.
“One of the easiest things to do is something I’d say not even 1% of people do,” he said. “The car loan you have, you may well be able to refinance and get a much lower cost in interest in that loan moving forward.”
Clark says credit unions are going to usually offer the best refinancing deals for auto loans and you can normally find the rate based on the make and model of your car and credit score online.
It’s also important to closely read the contract you sign when you buy. Know the interest rate and know what the contract says about repossessions.
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