Auto loan delinquencies high and getting higher

The number of American falling seriously behind on auto loan payments is rising, and it’s going up higher and faster in Louisiana than in most other states.
That’s the word in an analysis of Federal Reserve Bank of New York data by the Thompson Consumer Law Group.
The analysis measured the percentage of auto debt balances that went unpaid for at least 90 days.
In Louisiana, that figure was 5.29% of loans in the fourth quarter of 2023, the fourth-highest among the 50 states.
That was up from 5.44% in third quarter 2022 and 35% above the national average of 4.2%.
Auto loan delinquency raises the specter of repossession. In a standard auto loan, the vehicle purchased with the loan proceeds is collateral and can be taken back – repossessed, or repo’d – from a delinquent borrower by the lender.
“When an auto loan has 90 days of non-payment, that is usually when lenders start to attempt to repossess a vehicle,” said managing partner Russell S. Thompson, “so an increase of auto loan balances with 90 days or more of delinquency will likely mean more repossessions.”
Ninety days may be the standard in practice. But in Louisiana, a lender may begin repossession procedures if the borrower has missed two consecutive monthly payments. If the loan agreement calls for more frequent payments, the standard is 60 days without a payment.
And repossession means you lose your wheels, except under very specific circumstances under which a repo is considered wrongful.
Thompson writes that the two major reasons repossessions are considered wrongful are “breach of peace” and “no right” actions.
The breach variety occurs when the repossession involves a violation of some law.
“Some examples of what may count for this are using physical force, intimidation, threats, or trespassing on private property,” Thompson writes. “During a repossession, consumers have the right to be free from harm and coercion, and these acts violate these rights.”
The lender’s repo agent can seize your vehicle even if it’s on your property. But the repo man can’t take the vehicle if that would require some illegal act, such as breaking into a locked garage or tearing down a fence.
You’re not allowed to commit of the breach of the peace to stop a repossession, either.
The no right repossession means what it sounds like. Either the lender’s agent targeted the wrong vehicle, the lender lacked the proper documentation, or the owner of the vehicle had in fact kept the account current.
But those are the exceptions.
In general, Louisiana law doesn’t require a court order for a repossession. If the delinquency meets the 60-day standard, the lender or agent is required only to send written notice to your last known address before the vehicle is retrieved.
You will probably be liable for the cost of the repossession itself. And if the lender sells your car for less than you owe on the loan, you will probably be on the hook for the difference, too.
Do you have personal property inside your vehicle? If so, you’d be wise to remove it as soon as you get a repossession notice. If the property is in the vehicle when the repo company takes it, you’ll have 10 days to demand the property back from the lender, who must return the property immediately.
After 30 days, the property is considered to be abandoned.
The Federal Trade Commission offers this advice:
—Purchase wisely in the first place. Make sure you can afford your new vehicle. Do your best to make a down payment, and shop around for the best interest rate.
—If you fall behind, talk to your lender and explain that you can’t make the payments anymore. You may be able to work out a new payment plan, especially if the reason you’re behind is a hurricane, disaster or some other unusual event.
— Consider turning the vehicle over to the lender voluntarily. You’ll lose it, but you may avoid the fees associated with an involuntary repossession.
—You may be able to keep your vehicle if you file for Chapter 13 or Chapter 7 bankruptcy, but there will be serious financial implications.
You can download a .pdf document of Louisiana laws governing repossession by following a link on this story at StMaryNow.com.