The repo man is getting busy
From MSN
I loved that movie...
Bud: Credit is a sacred trust, it's what our free society is founded on. Do you think they give a damn about their bills in Russia? I said, do you think they give a damn about their bills in Russia?
Otto: They don't pay bills in Russia, it's all free.
Bud: All free? Free my ass. What are you, a f*ckin' commie? Huh?
Otto: No, I ain't no commie.
Bud: Well, you better not be. I don't want no commies in my car. No Christians either.
More vehicle owners are falling behind as the economy slows. Many slip when they lack the money to repair cars that they're still making payments on.
For the repo man, business is always good. But lately, it's been better than good.
As the subprime-mortgage collapse blares in the background, "recovery service agents" have been cleaning up the wreckage of another subprime-lending mess: that of the auto industry, which in its own competitive bid for buyers has been extending longer, costlier loans to people unable to keep up with their payments.
One in three auto-loan borrowers have payments greater than $500 a month, according to consumer credit agency Experian, and 12% have been late at least once.
In a survey for the National Automotive Finance Association, BenchMark Consulting International said monthly repossessions by subprime lenders increased 15% last year.
Manheim Consulting, which analyzes the used-car market, estimated a 5% increase in the total number of repossessed vehicles to 1.4 million in 2006. The Manheim and Adesa auctions resell most of the vehicles repossessed in the United States.
"The shorthand is that for years we've lived beyond our means, reflected in record debt levels, and now comes the paying phase," said Christian Weller, a senior fellow at the Center for American Progress, a progressive think tank in Washington, D.C. "Car loans have expanded as fast as mortgages, and in terms of the categories of what people borrow for, it is the second-largest.
"It fits the overall picture that all the economic-distress measures are trending upward."
Repossession agents in areas hit by foreclosures say they've been picking up vehicles both from people struggling to keep their homes and from those now left without work: construction workers, pavers, landscapers and real-estate agents
"It is actually stunning the number of cars we're taking from people who are supporting the local real-estate market," said J. Patrick Altes, the president of Falcon International, a recovery agency with offices throughout Florida. "It's almost the type of thing where we see it and you wonder if anyone else sees it. . . . It's like they turned off the spigot."
I loved that movie...
Bud: Credit is a sacred trust, it's what our free society is founded on. Do you think they give a damn about their bills in Russia? I said, do you think they give a damn about their bills in Russia?
Otto: They don't pay bills in Russia, it's all free.
Bud: All free? Free my ass. What are you, a f*ckin' commie? Huh?
Otto: No, I ain't no commie.
Bud: Well, you better not be. I don't want no commies in my car. No Christians either.
Comments
I think that is one reason that So Cal is going to be harder hit than many areas. I'd be willing to bet that more cars were HELOC'd in those areas than in Seattle. Driving around up here in Seattle I see fewer high end cars in general compared to the area encompassing L.A.
Boats can be spendy too. I know that Seattle has pretty high boat ownership #'s per capita (at least they did in the 90's) and can be purchased on 20 year loans. I can only speculate that boat ownership has also increased over the last 4 years.
Give it a couple years and then pick up whatever toys you might want. They'll be will be a firesale on BMW's, Mercedes, Lexus and all the other moderately high end cars in the southern states. It's well worth the time and effort to get a car out of AZ or SoCal (not a direct beach city such as Santa Barbara though). Not only do you save a ton of money and can have a nice drive up the coast back.
I remember living in LA in 1993-4 and driving home to seattle. I'd see these HUGE yachts being towed up I-5 and wondered WTF was going on? Why was someone towing something so large? turned out it was them being sold for huge discounts to Seattle buyers. Boat ownership here is high, but lots of huge yachts were bought on the cheap from distressed CA sellers in the last down turn.
Back then, my girlfriend's dad bought a lakefront home AND a 45 foot boat at firesale prices. It was a good time for those with cash.
I have a theory (not mine, really) that vacation homes and boats and other such luxuries will be sold first, before owners entertain the idea of selling their primary residence. I believe there are probably a lot of home owners that got a HELOC, bought a boat/cabin/'Slade, watched their interest rate go up to 8%, refinanced into one fat mortgage, and are now sitting on a large payment that's about to reset.
If it truly is the case that the decrease in regular houses will take 4-6 years, then maybe I'll just buy a cabin next year and rent for a while...