For those that aren’t aware of how the process of repossession works and more importantly where does the car go after it becomes a statistic of repossession. Funny but there really is not one answer for this question as it has many variables involved. To start with the most important variable is what kind of collateral, however for this post lets go with the most obvious and most common question coming in. Where is my repossessed car being sold? Or how do I buy at repossess auto sales?
First off it really depends on the agency the bank or finance company is using in many cases. Some agencies handle the entire repossession and sale of the car making it a much easier process for the bank ultimately getting it out of there hands by farming the entire thing out, the less people involved the easier it is on liability claims, on paperwork and on keeping track down the line. So they just give it to one company that in essence either does it all themselves or is a forwarding company sending out the repo orders and skip trace accounts to the little guys in each city. These larger forwarding companies normally have accounts in Manheim auctions which allows them to run the cars through in any city.
Simplified version of the repossession auto sale process
- Forwarding company sends company b an order, company b repossess that car
- Forwarding company gets pictures and condition report on car to send the bank or finance company
- company b sends out notice to the debtor
- Finance company sends out notice to debtor car will be liquidated
- Finance company instructs forwarding company of ok to liquidate
- Forwarding company if not sooner will instruct company b to transport to nearest Manheim auction (much cheaper storage, usually done after 1 week)
- Forwarding company will have its lane and run numbers for that auction each month
- Car runs through and sells for x amount
- Forwarding company will deduct all expenses, company b, their own charges, auction charges, skip trace if applicable, transport and storage
- The forwarding company will send the balance of the liquidation from expenses to the finance company and also send check to company b for repossession
This is why the finance companies and banks typically utilize forwarding companies now as this process becomes too many steps for the larger banks to handle properly or want to handle properly.
Another process of repossession auto sales
As liquidators ourselves, we have done this type of liquidation for some of our finance companies in the past that have requested us to do so, and also for the fact that we have always liquidated all types of collateral and have more than 20 years experience of doing so.
You may have gotten promotions in the mail, heard them on the radio or even 30 second TV commercials or have seen large tents being put up in big brand store parking lots. These are sometimes dealer trade ins or other times repossession auto sales. During these events there is typically a finance guy on site in order to approve sales on the spot, there is also heavy promotion and costs of leasing the space, permits involved, and a few sales people involved. The finance company does this in order to get more loans out there, rather than just liquidate. The auction is simple and would most likely bring more money up front after all said and done as far as just sales go, but these events can easily sell over 100 repossess autos even with no money down and make the finance company a killing in interest and fees for the next 5 years to come. So if they have a promo event like this once per month or even quarterly it helps sub-prime finance companies get more money out on higher interest rates typically ranging from 15% to 29% on a higher sales price to start.
If you are looking to purchase a repossess car, it is best to contact a small local dealer in the area that may have access to repossession auctions going on each week that are not open to the public. We have been contemplating listing all of the local repossess cars for sale on a page of this site soon.