WASHINGTON—The CFPB is expressing concerns over auto lending practices in a new blog post, including suggesting that high used vehicle prices may spur increased repossessions.
In the post the Bureau noted the rising prices of cars due to the chip shortage that continues to pose problems for automakers.
“The increasing cost of automobiles continues to be a major component of inflation, as many manufacturers face difficulties procuring chips that are a key component in cars and are therefore producing fewer new cars,” the CFPB stated in the post. “While the chip shortage has caused new cars to grow more expensive, the price increase of used cars has been sharper.”
The agency pointed out data show prices used cars and trucks increased 40% since January 2021, while the CPI for new cars increased 12%.
‘Increased Pressure’
“As car prices continue to rise, loan amounts are rising, and loan lengths are growing to make those larger loans seem affordable,” the Bureau said. “As a result, we expect that both the total amount of debt and the average loan size will continue to increase and that larger car loans will put increased pressure on some consumers’ budgets for much of the next decade.”
The agency also added it is concerned that current high auto prices, especially for used cars, might create incentives for lenders to repossess cars more quickly than would have occurred before.
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