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.”
Mike PeQueen,,,,what kind of name is that??????
I found out that I was due a small pension from a company I worked for in my youth.
Turns out…it was the same amount as a low, low interest loan for my truck.
It impacted my cash flow by about $10 a month. The truck will be paid off just in time to collect the “real” money—and it should last ten years past that.
Silly millennials and z’ers.
only the wrecked or used up BHPH repos. newer functional cars will be reconditioned and put back out on the streets.
I suspect many of those repos will be shipped overseas..like South America.
“only the wrecked or used up BHPH repos. newer functional cars will be reconditioned and put back out on the streets.”
Of course. If the cars are in reasonable shape they will end up in used car lots.
A bigger concern to me involves defaults on home mortgages as unemployment increases.
Many dealers charged huge markups over MSRP. I saw $10k for a Toyota Tundra and $7k for a Corolla Cross at my local Toyota dealer. All these fools that paid it are now stuck with much higher payments and they’re way underwater as far as the value of the vehicle is concerned. As used car prices come down to earth it’s going to be the same for those owners.
It's complicated. "Better the demons you know than the demons you don't." Mom is very vulnerable and if nothing else, the housekeeper is a long-time trusted friend.
I hope you are right.
Good point. I wonder how the local banks and credit unions deal with this? I've had my car serviced a couple of times in the last year. While roaming around the lots and sitting within ear shot of salesmen, $5K seems to be the norm for a list price markup..
7 year loans for a car is ridiculous.
Thanks genius.
I’ll be sure to tell the property managers for my rental, or my financial advisor that some ignorant troll on Free Republic set me straight.
Again, the same thing happened late 70’s under Carter.
I call it like I see it.
Many a rich person get there without knowing a thing about finance.
Are they worth more in other countries? I assume just the cost of shipping would be a big additional cost.
Either one of those warrants a vinyl wrap.
“ Low fixed rate loan doesn’t look so bad when inflation is 8% higher than your borrowed money. Of course, if you put the saved cash into the stock or bond market, losses exceed gains, so there is that”
I saw the writing on the wall early in the year and sold investments before the market dropped to pay cash for 2 cars with real motors I them.
Some people even finance their state tax title and tag! I can’t imagine being dumb enough (or desperate as the case may be) to pay interest for years on the TAX I pay the government. Utterly pathetic
Problem is too much of our economy depends on taking advantage of stupid people.
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