Beware the Auto Repo Man

[Lakewood90712]

Delinquent Auto loans . An indication of bad cracks in the "Consumer"
economy? Maybe.

https://www.cnbc.com/2019/02/12/a-r...are-90-days-behind-on-their-car-payments.html

 

[candrew]

"However, with growth in auto loan participation, there are now more subprime auto loan borrowers than ever, and thus a larger group of borrowers at high risk of delinquency," the report said.

Debt issued by auto finance companies, rather than at the dealer level, is responsible for most of the growth by less-qualified borrowers."'

Bad cracks in the consumer economy are only being exacerbated by the recklessness of lenders who choose to loan money to borrowers at high risk of delinquency for the purchase of a rapidly depreciating consumer item.

 

[marko]

OTOH, we were turned down for a JetBlue (Barklays) Visa card. Twice!

Seems that we truthfully entered our actual income and checked 'retired' as occupation. They sent us a nice personal letter asking us for more information as "your stated income appears too high for a retired person".

We didn't respond and waited six months and applied again, this time using a lower, more credible income. They came back saying that we had been rejected before and now our income didn't match the first so essentially, 'don't call us, we'll call you'.

We got a Delta card with no problem.

 

[frank]

I know a person with questionable credit and he went to a car dealer to purchase a car. they then said they would sell him a car and resell the loan. the rate was 25%, If the dealership sold they car to that person, with that poor credit, then they should know they would see it again.

 

[Another Reader]

There are probably a bunch of CDO's out there that are based on the low quality credit loans. The buyers of that junk will be the ones to suffer.

 

[street]

This kind of on the same topic, but I know a guy that actually goes and gets these auto's back for the company. He gets a key that will get into these cars and he actually steals the car at night or when ever. He gets paid a lot for doing that and local PD are involved in these recoveries.

 

[Lakewood90712]

OTOH, we were turned down for a JetBlue (Barklays) Visa card. Twice!

Seems that we truthfully entered our actual income and checked 'retired' as occupation. They sent us a nice personal letter asking us for more information as "your stated income appears too high for a retired person".

We didn't respond and waited six months and applied again, this time using a lower, more credible income. They came back saying that we had been rejected before and now our income didn't match the first so essentially, 'don't call us, we'll call you'.

We got a Delta card with no problem.

Barklays These were the geniuses that wanted to buy Lehman Brothers during the meltdown and their own regulator , the British Exchequer, wouldn't let them

 

[jazz4cash]

This kind of on the same topic, but I know a guy that actually goes and gets these auto's back for the company. He gets a key that will get into these cars and he actually steals the car at night or when ever. He gets paid a lot for doing that and local PD are involved in these recoveries.

Ok but he’s NOT stealing the cars since the borrower has not met the conditions of the loan. It sounds like these are borrowers that only qualify for a loan if the the lender keeps a key ( and probably installs GPS).

 

[Bamaman]

I worked in auto finance 24 years, and the delinquency numbers quoted above are truly frightening. They're saying 2.4% of the car loans are 4 payments past due--over 90 days late. If so, the industry is taking huge numbers of repossessions and losses--and they'll take a bloodbath in losses.

Our objectives were always 2% over 30 days late. Big difference.

And the job of the repo man has changed. With drug dealers and so many hard core criminals in the world, going out to pickup cars is now very dangerous. The repossession agents deserve to make big money for the risk they take. Modern cars also have security electronics in them--requiring they be dragged up on roll back wreckers.

 

[jazz4cash]

There seems to be an implied equivalence to the mortgage debt crisis that I just don’t get. Same with student loan debt. The mortgage crisis involved a lot of bad behavior among various participants and housing is an illiquid asset that touches many other parts of the economy. I just don’t see how subprime auto loans will have the same ripple effect.

I worked with some tow company operators in the hey days and saw them when the music stopped. The finance companies stopped issuing repo orders due to lack of storage space.

 

[Aerides]

There seems to be an implied equivalence to the mortgage debt crisis that I just don’t get. Same with student loan debt. The mortgage crisis involved a lot of bad behavior among various participants and housing is an illiquid asset that touches many other parts of the economy. I just don’t see how subprime auto loans will have the same ripple effect.

I agree, while the practices and impacts to the individuals may be similar, the packaging of sub prime loans into mortgage backed equities was a far wider and greater risk (and $$$) than car notes. Cars are also much easier to repo than homes. A flood of repos in the used-car market doesn't impact the value of my car (or home, or 401k).

The mortgage debt issue also decimated the value of the RE market, leaving many unable to sell for year being underwater, and that had knock on effect to construction, and retail home improvements, etc. And yes, car sales.

Lehmans and Bear Sterns would not go of business because of high rates of car note defaults.

 

[Lakewood90712]

Lehmans and Bear Sterns would not go of business because of high rates of car note defaults.

True, however , credit default swaps are still in wide use. Hopefully without crazy leverage ratios of the past.

 

[ExFlyBoy5]

There seems to be an implied equivalence to the mortgage debt crisis that I just don’t get. Same with student loan debt. The mortgage crisis involved a lot of bad behavior among various participants and housing is an illiquid asset that touches many other parts of the economy. I just don’t see how subprime auto loans will have the same ripple effect.

I worked with some tow company operators in the hey days and saw them when the music stopped. The finance companies stopped issuing repo orders due to lack of storage space.

Perhaps not analogous to the mortgage meltdown, but it could be a good indicator of the general health of people's finances which I don't think is so great these days.

 

[calmloki]

I worked in auto finance 24 years, and the delinquency numbers quoted above are truly frightening. They're saying 2.4% of the car loans are 4 payments past due--over 90 days late. If so, the industry is taking huge numbers of repossessions and losses--and they'll take a bloodbath in losses.

Our objectives were always 2% over 30 days late. Big difference.

And the job of the repo man has changed. With drug dealers and so many hard core criminals in the world, going out to pickup cars is now very dangerous. The repossession agents deserve to make big money for the risk they take. Modern cars also have security electronics in them--requiring they be dragged up on roll back wreckers.

"The life of a repo man is always intense." Harry Dean Stanton as Bud, from the all time favorite movie Repo Man. Monkee Micheal Nesmith as executive producer, generic food "heat that up son." "It doesn't get any better than this Ma.", aliens, punks, great music, lots of swearing btw:

 

[marko]

Perhaps not analogous to the mortgage meltdown, but it could be a good indicator of the general health of people's finances which I don't think is so great these days.

Our local paper has a daily police log which includes "police notified of a repo" being planned or in progress at a certain address.

At least in my area what I find interesting is that the bulk of the repos are in our more affluent towns on newer high-end luxury cars. How......embarrassing!

 

[Sunset]

OTOH, we were turned down for a JetBlue (Barklays) Visa card. Twice!

Seems that we truthfully entered our actual income and checked 'retired' as occupation. They sent us a nice personal letter asking us for more information as "your stated income appears too high for a retired person".

We didn't respond and waited six months and applied again, this time using a lower, more credible income. They came back saying that we had been rejected before and now our income didn't match the first so essentially, 'don't call us, we'll call you'.

We got a Delta card with no problem.

So funny....
Myself, I'm trying now after a couple of years to be consistent in what I tell the CC companies, so I write it down.
Currently I tell them a number like $108K is my income.
I used to jump around 80K -> 120K but figured that was bad:

• Could raise flags as maybe they all report and could compare.
• Might not be enough to get really good CC's

Now I have another reason to be consistent, there are only so many CC companies, and for sure they keep a file of me, so best my income is consistent.


In case anyone is wondering, any year I want my income can be $108K, as there is the income I spend (interest, actual part-time income, dividends, etc) plus Roth Conversions. So that number is very flexible.

 

[ExFlyBoy5]

At least in my area what I find interesting is that the bulk of the repos are in our more affluent towns on newer high-end luxury cars. How......embarrassing!

One of our neighbors almost had their house foreclosed on a couple of months ago. I know this from my DW doing a "market analysis" before we purchased our current house and coming across the lawsuit. They were able to do loan modification, but the principal is now about $15K more than the market value of the house and the payment is about $120/mo higher than it was prior to the modification. Nonetheless, they purchased a brand new S-class Mercedes last week.

 

[Bamaman]

Our local paper has a daily police log which includes "police notified of a repo" being planned or in progress at a certain address.

At least in my area what I find interesting is that the bulk of the repos are in our more affluent towns on newer high-end luxury cars. How......embarrassing!

And in most cases, the expensive cars are leased, not purchased. With the prices of vehicles going up so fast, especially on trucks, leasing is the future of the automobile business. And dealers make so much more on leased vehicles than sold vehicles.

 

[Mr._Graybeard]

In the city there are a lot of cheap car lots that finance their own sales -- "buy here, pay here" lots. They'll sell a car to almost anybody, collect a down payment, saddle the buyer with a usurious loan and count down the days until they send out the repo man. It's the same financial sector that issues payday and car title loans, preying on people in financial distress.

 

[kgtest]

I worked in auto finance 24 years, and the delinquency numbers quoted above are truly frightening. They're saying 2.4% of the car loans are 4 payments past due--over 90 days late. If so, the industry is taking huge numbers of repossessions and losses--and they'll take a bloodbath in losses.

Our objectives were always 2% over 30 days late. Big difference.

And the job of the repo man has changed. With drug dealers and so many hard core criminals in the world, going out to pickup cars is now very dangerous. The repossession agents deserve to make big money for the risk they take. Modern cars also have security electronics in them--requiring they be dragged up on roll back wreckers.

I feel like it would take a special breed to be a repo man, or a bondsman. They would literally need to value pride over safety. Being proud to recover stolen goods over fear of due harm.



If someone is reckless enough to let the car payment go 4x without paying, I do NOT want to be the guy to go retrieve it. I would be nervous at every corner.

 

[The Cosmic Avenger]

OTOH, we were turned down for a JetBlue (Barklays) Visa card. Twice!

Seems that we truthfully entered our actual income and checked 'retired' as occupation. They sent us a nice personal letter asking us for more information as "your stated income appears too high for a retired person".

We didn't respond and waited six months and applied again, this time using a lower, more credible income. They came back saying that we had been rejected before and now our income didn't match the first so essentially, 'don't call us, we'll call you'.

We got a Delta card with no problem.

Ugh, I've run into issues similar to that, too. Who the hell are these underwriters? They should be required to pass statistics and quantitative analysis classes, so they understand what they actually need to evaluate and how to best evaluate it, before they're allowed to make decisions that affect others. I see such horrible basic survey design in so many areas...and I'm not talking about intentionally leading questions or push polls, those are actually well-designed to do what the creators intend, even if it is somewhat sleazy.

 

[Walt34]

And the job of the repo man has changed. With drug dealers and so many hard core criminals in the world, going out to pickup cars is now very dangerous. The repossession agents deserve to make big money for the risk they take.

I talked with a guy once who was a repo man for private airplanes, some in other countries. In one memorable event, he and a partner started a fire at one end of the field as a distraction, then fired up the airplane to get it out of there. When they landed they were counting bullet holes in the airplane.

No thanks.

 

[Lakewood90712]

I talked with a guy once who was a repo man for private airplanes, some in other countries. In one memorable event, he and a partner started a fire at one end of the field as a distraction, then fired up the airplane to get it out of there. When they landed they were counting bullet holes in the airplane.

No thanks.

Come on, where is your seance of adventure ?

 

[audreyh1]

Ugh, I've run into issues similar to that, too. Who the hell are these underwriters? They should be required to pass statistics and quantitative analysis classes, so they understand what they actually need to evaluate and how to best evaluate it, before they're allowed to make decisions that affect others. I see such horrible basic survey design in so many areas...and I'm not talking about intentionally leading questions or push polls, those are actually well-designed to do what the creators intend, even if it is somewhat sleazy.

I think it's mostly a CYA type job - don't rock the boat. As long as they get enough business overall, they don't care about the exceptions and outliers.

 

[street]

Ok but he’s NOT stealing the cars since the borrower has not met the conditions of the loan. It sounds like these are borrowers that only qualify for a loan if the the lender keeps a key ( and probably installs GPS).

True >>> just bad wording by me. No these are cars/trucks that are purchased and are delinquent on payment from banks and dealers that are on loans. The auto company's have a key that fits every outfit it has a chip and if it goes in the slot it will start that outfit. I can't give any more information on the key but yes they have a way to do it. GPS I don't know about that but yes it COULD be turned on to find these cars I have no idea about that. Most are found from an address where these people live that they have etc..