2023-11-08 05:00:00
While many homeowners are struggling to pay their mortgage, a growing number of car owners and lessees are no longer able to make their monthly payment. The 90-day or older delinquency rate on auto loans is up 29% from last year, and many are handing over the keys to their lenders.
• Read also: More and more young people unable to repay their debts
• Read also: Clouds are looming on the horizon for the battery industry
When The newspaper asked Toufic Srabian how the automobile market was doing, his response was quick. “Just this week, a friend who works in a dealership had to sell a car because the owner was no longer able to pay the bank,” says this director of Encan Groupe Gabriel in Montreal.
“We feel that the market is starting to cool down. Anything that is a little expensive and requires financing, it slows down. People are fighting over each other these days. If we advertise a car for $4,000 or $5,000, it sells very quickly. People no longer want to go into debt for expensive cars,” he adds.
“At the moment, yes, we have more cars coming in than usual,” confirms Monica, receptionist at Enchères d’automobiles St-Pierre (Esp Ltee), in Lachine. When The newspaper contacted her, an auction was taking place. “Today, for example, we had a lot more vehicles. At the same time last year, we had perhaps around sixty fewer vehicles,” she says.
ESP AUCTION. The ESP Direct car auction in Lachine. Montreal, November 7, 2023. PIERRE-PAUL POULIN/LE JOURNAL DE MONTRÉAL/AGENCY QMI Pierre-Paul Poulin / Le Journal de Montréal / Agence QMI
Esp Ltee, like other auctions, obtains vehicles from banks and creditors who receive automobiles from people who can no longer afford their monthly payments.
Delinquent loans
The figures reflect the slowdown in the automobile market. Equifax recently revealed that the delinquency rate of 90 days or more on auto loans in the country had jumped 29% in one year. “We clearly see a significant increase in these,” says Jean-Philippe Saumure, senior advisor at Equifax.
Auto loans are the Bank of Canada’s new concern. This recently highlighted that in Canada, in addition to mortgage borrowers, other borrowers are facing difficulties, in particular those who have taken out loans to purchase motor vehicles. “In particular, delinquency rates for auto loans have exceeded pre-pandemic levels,” the Bank highlighted recently.
Throw away ballast
Pierre Fortin, president of the financial reorganization company Jean Fortin, also confirms that car loans are increasingly the “ballast” that people in financial difficulties are relieving themselves of these days.
“I see more than before, people giving their keys. We told them: “This is probably the only time in your life that you will be able to go back on a car contract”. When there are large sums at stake, it may be better to clean up and start fresh, he says.
“In a bankruptcy situation, you have the right to say: “I want to give back my car”. And you are not responsible for the loss that the creditor will suffer,” assures Pierre Fortin. The dealers deal with that, they send the car to auction. This is provided for by law.”
See also:
Do you have any information to share with us about this story?
Write to us at or call us directly at 1 800-63SCOOP.
1699426088
#mortgages #car #loans #weigh #Quebec #households