Posted on 08/04/2022 9:11:56 AM PDT by Signalman
LAS VEGAS (KSNV) — A perfect economic storm of inflation, soaring gas prices and the unintended consequences of the federal pandemic relief programs is closing in on many car owners.
“We’re talking, on average, 15,000 repos a day nationwide,” said Mark Zane, owner of a repossession company and president of the Nevada Association of Licensed Repossessors.
Zane says repossessions were all but non-existent during the pandemic because banks were working with car owners to defer payments or help them get caught up.
Those days are ending, however, and banks are taking the necessary steps to start the repossession process on vehicles in default.
“Right now, we're seeing a slow move because of the banks and the national lenders have to wait until their criteria is hit with default,” said Zane. “So, if the criteria of lender X was 90 days and we sent out a report, we're in that 90-day period right now where you had a lot of people that were able to get caught up on their car because they didn't have those old back payments.”
“Right now we're in the middle of waiting for the default to hit,” Zane said. “Our big problem is we're telling the national lenders don't wait that long, because if you hit us and blow us up with everything that we believe is coming because of the way the economy is currently, then we're not going to be able to service those contracts.”
While many car owners are struggling to make their monthly payments because of inflation and high gas prices, economist Mike PeQueen says the source of the problem can be traced back to the COVID-19 pandemic, when many people, flush with stimulus checks, decided to buy a car they would eventually struggle to pay for when the government money stopped.
“If this were really a bad trend, we would see repossessions from across the board - people that bought in a four- or five-year period,” PeQueen said. “But it's really just limited to that two-year period where the majority of this is which does seem to indicate that it was a strange time, which we knew. And people made strange economic decisions based on how much money they had in their pocket, which was not a sustainable amount of money.”
There is an upside, however, according to PeQueen. While used car prices soared during the pandemic, adding more inventory by way of repossession should help bring prices back down.
“A picture of repossession of automobiles above average for the next several months is not something positive for the economy, that's for certain,” said PeQueen. “What it will do is probably take some of the steam out of the used car market,” he added. “That is probably over now with this new supply of cars coming in from the repo side of things.”
Yep. And these new vehicles loose 20% of their value once they drive off the vehicle lot.
A housekeeper of my mom's is always running from her creditors. She had a new car repoed within 4 months of getting it, and she had trashed it in that short time span.
My fear is Cash for Clunkers II, as the government tries to get as many ICE vehicles off the road as possible.
I have 3 cars and my “fleet” average is (2001+2005+2012)/3 = 2006
Hopefully the dumping of all of those vehicles on the used car market will depress the entire market and get prices back down to where they should be. I’m looking for a used pick-up and prices are crazy (but better than last April). Luckily I’m in no hurry.
“When the bank sells the re-poped vehicle,and the total amount of the loan is not satisfied...the previous owners are on the hook for the remainder of the balance”
There are a few non-deficiency states.
95% never pay deficiency balance and the others are settled at about 60%
(the ones who had co-signers)
I’d like to put my order in for a freshly repossessed 2022 toyota tacoma 4x4 please......any color but that puke peanut butter tan.
Treat it like a gun buy back. Offer $500 more that the dealer.
Or that baby sh!t green color.
“If you can’t pay cash, you can’t afford it.”
That’s my philosophy too. And it’s especially true with a money-sucking, depreciating asset like a car. Taking out a loan to buy a vehicle for personal use is one of the dumbest financial choices out there. I’m sorry, if the only functional car out there that you can afford for cash is a 2008 Corolla then that’s what you should be driving.
You know what the only thing more expensive than getting body art is don’t you?..........getting it removed.
I can afford nice cars, but I still drive a 2003 Honda.
I’m the same way. CASH or pay the entire the amount. Since high school, if there’s something wrong with it, lemon laws say bring it back.
NEVER in my life am I stupid enough to pay for a car on a monthly basis. If cant pay for it now, what makes you think you’re responsible enough to pay month to month?
I don't like the way Honda has gone all CVT. I think they suck.
I personally know the car financing department head for Chase in my city. She explains there is a plot of property in L.A. the size of 10 football fields which houses their repo’s the past year, I kid you not.
I assume it would be to buy from an owner who can't keep up w payments, rather than wait for the repo chain to add their "profit margin" to the price.
All the fools who signed for adjustable rate auto loans are now paying extortionate interest rates.
Too bad. Should have read the fine print.
15,000 cars added to the used car market each day will hopefully bring the prices down closer to sanity.
“There is an upside, however, according to PeQueen.
While used car prices soared during the pandemic, adding more inventory by way of repossession should help bring prices back down.”
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