The car repo business is not booming as much as we would think it is. For a while, repossessions were high because there were so many people who bought cars and then couldn’t make the payments.
But now, according to a story by the Wall Street Journal, repossessions are down because financing for car loans is down and consumers can’t buy cars now like they could a couple years ago.
This repo lot is full of cars that were taken from owners who couldn’t make the car loan payments.
Repo orders across the country increased to 1.67 million last year, from 1.49 million in 2007, reflecting defaults on cars bought over the previous 12 to 24 months, according to Manheim, a used-car auction company. Car loan financing is down 32% from a year ago, according to Experian Automotive. This makes it harder for repossession companies that work for subprime lenders, the WSJ reports.
"People are doing everything they can now to hold onto what they’ve got," says Tony Cooper, owner of Professional Auto Recovery LLC. "Do you think they’re going to wait [around] to give up their cars? They hide them. They fight over them."
Revenue from repossessions fell 23% in 2008 from the previous year. Competition has driven Cooper’s per-car fee from the $350 and $400 range to as low as $250.
When auto loans were easy to get, many delinquent borrowers just handed over the keys because they could always get another car, the story explains. Now, many debtors are desperate to keep their vehicles since chances of getting approved for another auto loan are slim.
Image via blog.leasetrader.com.