Lots overflowing with repo vehicles
What's the second biggest purchase after a home? Most of the time, it's a car. And with so many people losing their homes, it's really no surprise that so many people are also losing their cars. Repossession companies are reporting record business -- so much so in fact that they are securing additional lots on which to store the delinquent goods.
It's estimated that this year will see a 10-percent rise in car repossessions, with 1.6 million vehicles expected to disappear from driveways and streets. It would be the second year of double-digit rises in repos. (And that doesn't count recreational vehicles like boats, which should suffer even higher rates of return.) And it appears no one has been spared -- repo men report taking back high-end trucks as well as luxury cars from gated communities.
The culprit, as in the housing debacle, has been claimed by some to be the generous auto loans given to those who perhaps should have got a bit less to spend. One repo man said it would have been worse if employment hadn't stayed relatively strong. That will be little comfort to banks like Wells Fargo that -- by itself -- wrote off $1 billion in bad loads last year.
[Source: USA Today]
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Reader Comments (Page 1 of 2)
Bungle 4:59PM (2/14/2008)
Life of a repo man is always intense.
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Snix 4:20PM (2/15/2008)
This will be the next money crisis, when all of these banks start writing off bad loans.
You can just about walk in a dealership and get a car loan because you have a pulse, because the dealerships are so desperate to move the iron out the door. How do I know this? A friend of mine sold cars for a while.
It just gets better as time goes on.
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Tyo 5:14PM (2/14/2008)
Youre dead on.
Theyll give anybody a loan for anything, just like the urban leagues popping up all over the country selling people mortgages based on half thei monthly income who had problems paying the rent in their apartments.
Think about it. How many of you actuall OWN anything?
Do you own your car, or does a bank?
Do you own your home, or does a bank?
First they take our rights, then our jobs, then our transportation, and finally our homes.
Live inside your means people.
FEMA Camps, here we come.
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j_diesel 3:09AM (2/15/2008)
mom always said, with the exception of a house if you can't pay cash, you can't afford it. even with the house you should have some kind of sizeable downpayment. it really puts needs and wants in perspective.
CaptainSpaulding 5:17PM (2/14/2008)
That's a pretty bleak outlook, but things appear to moving that way, unfortunately.
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Bill 5:25PM (2/14/2008)
People need to live within their means. A lot of folks are going to learn it the hard way, but they need to learn it.
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Luis 7:15PM (2/14/2008)
Couldn't agree more. How many people do we all know that see their neighbor buy a new toy and they've got to have the same or better. The era of living for the Jones is over.
A&W 5:30PM (2/14/2008)
"And it appears no one has been spared -- repo men report taking back high-end trucks as well as luxury cars from gated communities." "And that doesn't count recreational vehicles like boats, which should suffer even higher rates of return." Those "anybody with a pulse" folks may be the culprits but not the only ones.
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DKB_SATX 6:11PM (2/14/2008)
In fact casual empiricism tells me that middle-income people are at LEAST as likely to get in over their heads, because even when credit requirements are pretty lax it is easier for them to borrow money for multiple vehicles/toys after they've bought their house than it is for lower-income folks. When I lived in the 'burbs I'd see people move into the big house in older vehicles, and within a couple of months new cars/trucks/SUVs would appear, and after the Boat Show there'd be the occasional new boat around on the weekends (couldn't have the boat outside the garage overnight per the HOA, doncha know!)
The combination of a consumption culture (keeping up with the neighbors) and stupidly lax credit (loaning people more money than the new car is worth to pay off the amount they're upside down in the previous junker) has set careless people up for failure. Social Darwinism says let them fail. Never be upside down in your car loan, never be upside down in your home loan.
Seoultrain 5:31PM (2/14/2008)
With America's problems with National Debt from financing Iraq and the sub-prime mortgage debacle, this is just a speck on the radar screen. Maybe with a flooded used car market, people will make some responsible decisions.
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rideandrome 5:33PM (2/14/2008)
So that mean more cars in auctions... does anyone know where to find such auctions? Other people's dumb buy could be my next car :)
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Steve G 5:39PM (2/14/2008)
Check your local newspaper. These auctions are generally held once a week or once a month depending. You can get a good deal if you do your research. If you REALLY know what you're doing you can make a pretty penny flipping these cars around.
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rideandrome 5:52PM (2/14/2008)
Thanks for the info; although its always nice to make extra money, I'm just trying to find myself a nice, reliable car for a good price.
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Owain Ozymandias Buck 5:51PM (2/14/2008)
I've got an old buddy who is an auctioneer--mainly for auto auctions. I should call him up and ask him if business is picking up.
Repo Man is one of those jobs me and my friends considered when we were younger. It sounds exciting, somewhat profitable, and not boring. But man, I know it's legit and keeps the system of law and financing going, but I would just feel dirty doing repos. I'd rather be the put down man at the animal shelter.
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Ted Kennedy Is My Chauffer 5:52PM (2/14/2008)
96% of home owners are having no trouble living within their means. 4% of home owners are morons who want to live a life beyond what they can afford. The government can set up all sorts of safety nets, courtesy of taxpayers' money, but you can't regulate behavior, or as Ron White says, 'you can't fix stupid'.
In 1977, the government, in an effort to 'help' lower income people, pushed mortgage companies to lower their standards of eligibility. In 1994, this tactic was enhanced further, once again, in the name of 'helping' people. We are now paying the cost for this government 'help'.
The government shouldn't manipulate a free market, as every time it does, it screws things up, ie; Jimmy Carter not only enacted the legislation that gave us the current lending fiasco, but also enacted price controls on gasoline which gave us gas prices of $3.21 a gallon (in constant dollars) back in 1981.
People are raving about how the average person is paying $750 more per for gasoline than they did five years ago, but no one points out that the average person also keeps $2000 of their own money each year courtesy of lower taxes. $750 going to an oil company is bad, $2000 squandered by the government is good. At least my gas money gives me something tangible.
Bottom line, not everyone is capable of owning a home. Some people are only capable of being renters. Excluding medical situations, people encounter financial trouble through their own poor behavior. End of story.
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DKB_SATX 6:46PM (2/14/2008)
While I agree wholeheartedly with the first 2 paragraphs and won't argue the 3rd, you lose me with this "average person keeps $2k more after taxes" part. You're being taken in by the misdirection of our current administration, the more valid measure is how much the MEDIAN taxpayer's taxes were reduced, not the average. The reduction in taxes on millionaires really skews that average up, and that's a red herring in this particular context because the only reason a smart millionaire would finance a car is because the rate offered is less than what he's make on an investment of the money he's not paying up front.
Yes, I pay less in taxes because of the tax cuts (I'm in the middle class) but it's not $2k, and I'm low in the "4th quintile" of income on the 2006 national stats.
blogged to death 6:24PM (2/14/2008)
The dealer I worked at (Honda/VW) we turned away quite a few customers who had terrible credit or $3-$25k in negative equity (yep up to $25k where someone tried to trade in a highly optioned out quad cab F150). They wound up going to the Ford/GM/Chrysler/Mitsubishi dealer down the street - sometimes if you were lucky you could see them drive away in a new Taurus (where the Taurus they tried to trade in w/ me they were $3-$10k upsided own). I just didn't phatom how that worked out - b/c there's no way the offer the Ford dealer gave would make up such a difference. I'd see interest rates of 6.8% on 60/72 month loans with finance fees etc. built in (customer would bring in the documents from the original purhase).
Some people just can't get it that they can't afford it and just ruin their credit and stress themselves out.
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Roanoke 6:03PM (2/14/2008)
Ted... You hit the nail right on the head. Couldn't have said it better myself.
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JMC 3 6:04PM (2/14/2008)
I agree.People who live beyond their means and then cry "predatory loan" are especially thick.
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jg 6:20PM (2/14/2008)
This is caused by lack of oversight not government manipulating some weird 'free market' thingie. There's is no market without government so stop pushing this free market fallacy on people who didn't take economics in school. You want a less regulated market not a free market. Less regulated so that the creator classes can keep their cash and do wonderful things for the country which will make us all better. BUNK. This is republican strategy, next will be the bailout with the patriotic sounding name, Protecting America's Economic Future or some such thing. All planned. S&L anyone?
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