More people are falling behind on car payments

DUNCANVILLE, Texas (CBSDFW.COM) – Every car and truck sitting at the Hide and Seek Recovery auto yard in Duncanville represents a loan gone unpaid.

“From the fence line to the back, it’s all repossessions,” says owner Mike Aghyarian. “Right now, we’ve probably got 200, close to 220 cars in the yard. Usually, we’re around 110. It’s almost doubled.”

It’s getting hard, he says, to find space for them all.

“It’s a difficult business to be in, right?” he says. “We hear everything. We hear every story.”

The number of people more than two months behind on their car loans, according to Cox Automotive, was up 26.7% this December compared to a year ago.

“Sticker prices have gone up so people are borrowing more money. That’s left a lot of households with monster payments, says Greg McBride, chief financial analyst for Bankrate. “Those $700 or $800 a month car payments can be an absolute budget buster. So, particularly for our customers with weaker credit, we’re already seeing an increase in delinquencies and defaults that may foretell a broader trend in that direction if the economy slows as the year progresses.”

McBride’s advice is to face trouble head on. “If you are having difficulties, call your lender ahead of time. They may have loan modification or other arrangements that could be worked out, so you can keep the vehicle.”

As car prices stabilize and more people find themselves owing more than their cars are worth, though, some are choosing to surrender them rather than keep struggling to pay them off.

“There are even people who deliver cars here,” says Aghyarian. “They were like, ‘we don’t want it anymore.’ We actually have people call our facility to see where can they drop a car off.”

His company receives projections from banks on how many repossessions it can expect to be doing in coming months. He says, they’re predicting the number of delinquent car loans will continue to grow.

During the pandemic, the business was seizing about 500 cars a month, as banks allowed customers to defer payments. That’s beginning to change, and this year, Hide and Seek is preparing to go from seizing 1,500 cars a month to as many 1,900 a month.

“That’s why we’re adding two more locations,” he says.

When his business booms, though, he knows borrowers are struggling.

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