Drivers are defaulting on their loans, and banks are repossessing cars in record numbers. According to Newsweek, a recent study projects 3 million cars will be repossessed by the end of the year. That would be the most since the peak of 2009’s financial crisis (3.2 million).

Here’s how those numbers break down: 2025 has seen 7.5 million repossession assignments, and the CURepossession study projects 10.5 million by the end of the year. That’s because 30% of repossessions usually occur in the fourth quarter of the year. With current recovery rates, that would result in approximately 3 million cars actually taken back by banks.

How is this happening? Fitch Ratings reports that by August, 6.43% of subprime auto loans were 60 days past due. That number hit a 30-year high in 2025.

$1.66 trillion in looming debt

The average new car transaction price just broke $50,000 while the average used car transaction price is hovering at $25,000. But many loans are even larger. I recently reported that 1 in 4 car buyers are now rolling in debt from old, “underwater” cars into new loans. In total, we’re looking at $1.66 trillion in debt.

“Auto finance is at a breaking point, as Americans owe over $1.66 trillion in auto debt. Delinquencies, defaults, and repossessions have shot up in recent years and look alarmingly similar to trends that were apparent before the Great Recession. Cars are more expensive than ever, due in part to economic factors, but also due to the fraught experience of buying and financing a car. Dealers and lenders have long engaged in deceptive and predatory practices that jack up prices for car buyers in order to line their pockets.”—The Consumer Federation of America

If enough drivers default on their car loans, could it cause a recession? Possibly. 

Auto loans are about 1/8th the size of mortgages, so there’s less debt at stake than during 2009’s sub-prime mortgage crisis. That said, big banks now have a shockingly close relationship with sub-prime auto lenders. An obscure auto loan lender in Texas collapsed in October. It turns out that the lender was propped up with half a billion in loans from names such as JPMorgan, Barclays, and Fifth Third. After the collapse, Jamie Dimon, CEO of JPMorgan said, “When you see one cockroach, there’s probably more” 

Heres my draft. Retype with any suspected mistakes or typos addressed. AP style (except with oxford commas). Don’t change anything inside quotation marks, minor tweaks only, list everything you changed. Do break up any sentences over 20 words. Do change any sentences in passive voice to active voice. Otherwise, this should NOT be a major re-write. Subheadings should all be bold, H3, and in sentence case (capitalize first word, then only proper nouns. Headline in AP-official headline case (capitalized).