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Car Repos Are Exploding. That’s a Bad Omen.
barrons ^ | July 8, 2022 | By Lisa Beilfuss

Posted on 07/10/2022 3:30:26 PM PDT by RomanSoldier19

The jobs report and minutes from the Federal Reserve’s June meeting were the economic highlights of the week, but they are, respectively, a lagging indicator and old news. This column instead digs into the auto market, where there is an underappreciated ticking time bomb.

Lucky Lopez is a car dealer who has been in the business for about 20 years. In recent meetings with bankers, where he bids on repossessed vehicles before they go to auction, he has noticed some common characteristics of the defaulted loans. Most of the loans on recently repossessed cars originated during 2020 and 2021, whereas origination dates are normally scattered because people fall on hard times at different times; loan-to-value ratios, or the amount financed relative to the value of the vehicle, are around 140%, versus a more normal 80%; and many of the loans were extended to buyers who had temporary pops in income during the pandemic. Those monthly incomes fell—sometimes by half—as pandemic stimulus programs stopped, and now they look even worse on an inflation-adjusted basis and as the prices of basics in particular are climbing.

(Excerpt) Read more at barrons.com ...


TOPICS: Business/Economy; News/Current Events
KEYWORDS: automotive; carrepos; depression; economy; vehiclerepos
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To: cableguymn

I agree. They’re good at it.


61 posted on 07/10/2022 5:24:18 PM PDT by laplata (They want each crisis to take the greatest toll possible.)
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To: RomanSoldier19

Friend of a friend is a wheel in a small bank chain. He said their overdraft fees crashed during covid (people not going out and spending). It has slowly been rising, and in June, their bank got their most revenue ever in overdraft fees.


62 posted on 07/10/2022 5:28:22 PM PDT by Pappy Smear
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To: laplata

A favorite one of mine closed recently.

I would go there on a trip to visit family and a few friends.


63 posted on 07/10/2022 5:29:47 PM PDT by wally_bert (I cannot be sure for certain, but in my personal opinion I am certain that I am not sure.)
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To: HombreSecreto

I’m gonna bag your car!
————————-The Other Repo Code


64 posted on 07/10/2022 5:34:07 PM PDT by TalBlack (We have a Christian duty and a patriotic duty. God help us.)
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To: RomanSoldier19

More evidence of a built back better economy. /s


65 posted on 07/10/2022 5:44:34 PM PDT by DoughtyOne (I pledge allegiance the flag of the U S of A, and to the REPUBLIC for which stands.)
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To: mplsconservative

Just saw a commercial that rhe current price of a new Cherokee bare bones was $61,000.

Wow have they jumped.


66 posted on 07/10/2022 5:45:33 PM PDT by tired&retired (Blessings )
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To: traderrob6
Other than a loan shark, who would be crazy enough to loan $ to the tune of 140% of the value of what is being financed?

Dealers didn't have cars on the lots and were jacking up prices above MRSP, especially on luxury vehicles. Had a Mercedes dealer in Houston try to get an extra $12k over MSRP after I had my car totaled from an accident. It was ridiculous, but they were selling at that price markup...just not to me.

Same as houses. People had that the extra money for downpayment which would get them a bigger loan, or even just a loan. My realtor lost two potential sales after the first rate hike because buyers couldn't qualify. If a 1/2% disqualifies a person from a loan, then they had zero buying that house in the first place.

67 posted on 07/10/2022 5:50:36 PM PDT by voicereason (The RNC is like the "one-night stand" you wish you could forget.)
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To: tired&retired

New Jeep Cherokees start at less than $35k. Trailhawks are under $45k.

If you want a hot rod, just pay.

My wife wants a Maserati. She’ll need her mother to pay for it…


68 posted on 07/10/2022 6:04:25 PM PDT by jjotto ( Blessed are You LORD, who crushes enemies and subdues the wicked.)
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To: cableguymn

Most car loans require a 10% down payment or more.


69 posted on 07/10/2022 6:05:58 PM PDT by carcraft (Pray for our Countr)
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To: cableguymn

My BIL who did just about everything possible wrong with his kids, particularly financially speaking, got a new pickup on a 12 month lease for one 18 year old son. It was $99 a month with 12k mile limit. Well the kid gets a job as a pizza delivery driver and 6 months into the lease dad has to turn the truck in and pay off the lease (the kid had no money). To deliver pizzas. This was quite a ways back as you can guess by the numbers.


70 posted on 07/10/2022 6:17:48 PM PDT by ChildOfThe60s ( If you can remember the 60s.....you weren't really there..)
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To: RomanSoldier19

A rare Invader Zim reference! Outstanding!


71 posted on 07/10/2022 6:22:58 PM PDT by CletusVanDamme (Well I'm all broken up about that man's rights...)
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To: MHGinTN

https://www.youtube.com/watch?v=vECdGKvUpZw

https://www.youtube.com/watch?v=x02ym6BCRwc


72 posted on 07/10/2022 6:29:03 PM PDT by Tijeras_Slim
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To: Gen.Blather

That’s a lot farther East than where I go. But it seems like a fun place. I hang around from Pensacola to Destin when I used to vacation. Don’t know if I’ll be able to do that anymore courtesy of Brandon.


73 posted on 07/10/2022 6:34:41 PM PDT by BipolarBob (I spent 20 yrs. training my monkey to talk and he finally said "A pox on you" and then died.)
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To: RomanSoldier19

Probably a lot of those $70,000 Jeep Renegades that those urban clowns just had to have.


74 posted on 07/10/2022 6:44:39 PM PDT by Old Yeller (A nation of sheep, produces a government of wolves.l)
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To: Fresh Wind

Most dealerships will keep a used car on their lot for 45 days. After that it’s heavily discounted for a few days and if it still doesn’t sell it goes to auction. If you catch it just right you can sometimes get a good deal.


75 posted on 07/10/2022 6:49:18 PM PDT by fella ("As it was before Noah so shall it be again,")
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To: Zhang Fei
they only release them so often

In Texas, creditors can’t stockpile repoed cars. The financier does not own the repoed car, but merely has a security interest that allows them to take possession of the car and sell it in a commercially reasonable manner.

Are there states where the financier just keeps the car, and has good title to it? In the absence of a commercially reasonable sale, I do not see how it may be determined if the buyer still owes the financier, because the car is worth less than the loan balance, or if the financier owes the buyer, because the car was worth more than the loan balance and cost of repo. (It happens — but not often.)

76 posted on 07/10/2022 7:15:32 PM PDT by Pilsner
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To: Gen.Blather

Slum lord./s


77 posted on 07/10/2022 7:16:28 PM PDT by chuckb87
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To: rbg81

“This tells me the chip shortage is yet another way they are trying to nudge the public away from ICE cars.”

That is something to think about, but I can’t understand why an EV would have have any less chips?


78 posted on 07/10/2022 7:38:48 PM PDT by caver
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To: Rebelbase

Did you read the comments on the Newsweek site? They deserve their misery. What a bunch of dumbasses.


79 posted on 07/10/2022 7:45:20 PM PDT by caver
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To: caver

That is something to think about, but I can’t understand why an EV would have have any less chips?


No. I said an EV has, on average 2X as many chips as a gasoline car. So it has more.


80 posted on 07/10/2022 7:58:14 PM PDT by rbg81
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