Record rate of repos in 2008
The mortgage meltdown and the financial crisis on Wall St. is one of the biggest stories of the decade, but another serious problem is hitting automakers in very much the same way. All those real estate agents and mortgage brokers that reaped the rewards of the housing boom are losing their Bimmers and Lexuses because the money train flew off the tracks. Repos in the US are poised to hit the 1.9 million mark, which is 15% more than in 2007. Construction workers that ponied up big cash for an expensive truck or SUV are now searching for work, and they can't pay their monthly payments, much less the gas.
At first glance it would appear that automakers were doling out bad loans just like the banks, but that's not entirely true. The high amount of luxury vehicles being repo'd have gone up as well, and many of those buyers have very good credit scores. Automakers are losing big here, too. The average loss on a repo is about $10,000 at GM and Ford. Some repo men say they're actually struggling since Automakers are lowering payments on struggling loanees instead of retrieving the defaulted vehicle. And heavily discounted repos that hit dealers give customers one more incentive to bypass the new car lot. In all the record high rate of repossessions is just one more reason the auto market is in a nose dive.
[Source: Automotive News subs req'd]
Reader Comments (Page 1 of 2)
JayP 9:44AM (10/14/2008)
"Credit is a sacred trust, it's what our free society is founded on." - Bud
I need to watch it again.
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Ayatollah Rodriguez 9:49AM (10/14/2008)
Bud from Married with Children?
TJ 9:46AM (10/14/2008)
Student loans and credit cards are next. Any structured finance transaction, ABS, MBS, and CDO will be affected globally.
The house of credit cards is being dismantled piece by piece. Dependency and entitlement are scary things. We witnessed the global population become dependent to debt and credit. We are now witnessing government socialistic creep to replace dependency on capitalism with dependency on the government. The welfare state on steroids. Don't worry. The government is here to make sure you never want.
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BoxerFanatic 2:25PM (10/14/2008)
"We're sorry, we can't do that...
But we'll still try to make sure that everyone wants equally."
It never goes to the highest common denominator, it goes to the lowest. Equality of misery.
Where did I put that carter-era misery index....
John R 9:53AM (10/14/2008)
Repo'd for what? Who are they going to sell these cars to? Who CAN buy these? Anybody solvent enough to buy right now is not going to buy a repo'd car.
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MajorGeek 10:02AM (10/14/2008)
You should visit an auction sometime. People will buy them cheap, drive em or put them on their lots for a fair price. Depending on where the auction is many companies drive for hours to bring back a truckload. In an economy where everyone is being told to panic, a used repo at half its previous value is a sweet deal.
John R 10:05AM (10/14/2008)
I guess...
ASEVENSEE4 9:59AM (10/14/2008)
Hah, I just saw my neighbors 08 Accord get repo'd.
Sucks.
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Quattrofan 10:29AM (10/14/2008)
People making 35K a year are driving 50K cars and SUV. Can I get a collective "DUH"!
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Axis 10:45AM (10/14/2008)
Living beyond your means, repo's are a hard wake up call, a lesson learned for most of these people i hope.
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BrianFL 10:50AM (10/14/2008)
Me living in Southwest Florida (#1 in US for foreclosure) repoing is nonstop here. Boats are the first to go most of the time for people. The Luxury brands are really bad here too. Alot of realestate agents bought Lexuses and Bimmer to show off there sucess of the housing boom that they had and are now wading tables at Denny's.
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luv_the_car 10:53AM (10/14/2008)
'....Some repo men say they're actually struggling since Automakers are lowering payments on struggling loanees instead of retrieving the defaulted vehicle....'
This is what i consider not fair. same goes with housing market. why dont they give some credit to the people who pay everything on time? do they have to stop payments for a few months so that they can get a lower payment?
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Jeff 11:11AM (10/14/2008)
I work in Mortgage collections; while it is enfuriating to see the kind of "deals" people are getting (rate reductions, debt forgiveness, etc), do not forget what chronic delinquency does to to someone's credit score. I always advise people that get a "reduced" payment and have been delinquent to take care of their assets and make them last, because the likelihood of getting approved for a new one in the next 7 years ( or in this case, a new car loan) is next to zero!
So don't get too upset, feel safe knowing you pay your bills and can still finance the other things you need
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chrisdavis 11:26AM (10/14/2008)
A good credit score alone is not justification for a loan. People can have great credit scores while living well above their means, but it will catch up with them.
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Nizal 11:34AM (10/14/2008)
3F > crisis
fuel / financial / food crisis...
http://grazycar.blogspot.com
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PaulPaul 11:59AM (10/14/2008)
sucks to be them, good to be me, so many bargains out there right now;
but because i'm actually a nice guy I will share a tip on how to get a car even if your credit is in shambles: don't borrow money to pay for a depreciating asset! if you have to get a loan to get a car, you can't afford it! (unless it's 0% which might help you build credit but unless you are in top 1% you won't get 0% ololo)
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Dave B 1:20PM (10/14/2008)
any one know of any repo auction sites or places in the detroit area? i searched online but didn't find anything that has nice cars.
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Patrick 1:36PM (10/14/2008)
The luxury automakers must be hit the most, since most of their 'sales' were actually leases, and lots of those were from people stretching to have a nice car so they can portray the image of living the Bling lifestyle.
I think the most necessary corrective action to this financial cluster-F is to start at the root cause -- Americans not understanding jack$hit about finances. There needs to be a mandatory personal finance/econ class in high school to educate people about why buying everything on a 25% credit card is bad. But with school budgets getting slashed every year and the US Govt only interested in treating symptoms and not the causes, unfortunately not much will change. :(
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Martman 1:51PM (10/14/2008)
people have been living beyond there means for so long that is finally catching up. Happened to us 3 years ago. Had line of credit 2 credit cards a car loan kid with healh issues etc etc. we had been living like that for several years. But we also believe in paying our bills so we borowed a large sum of money got rid of the line of credit and the credit cards and we should be debt free in the next 6 months it was not easy and it has been 3 long hard years but we are doing it our car is a 97 our van is a 96 and it would be nice to drive new ones but they cost too much money.
here in Canada our banking system is differnt so we are not in as much trouble as the USA, but it may come to that here as well.
You may have to give up alot but you can pay off your bills and come out with a clean credit.
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ambientFLIER 9:02PM (10/14/2008)
Good for me, I guess. I'm looking to buy a 350Z soon. Sports cars are the first thing to go when people are tightening their belts...
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