It has been a while since repossessions have truly flourished like they did in the early 2000’s. I can remember the days of repossessing 2 to 3 boats a day or perhaps a large aircraft once or twice a week and getting around 30 high end skip trace jobs per week along with those. Thing is those days haven’t came around in a while and most likely will not return in this lifetime. Things are bad and anyone with any kind of true sense just knows things aren’t getting better.
With that being said just as I called it last year with the influx of people to the United States, the new car sales spiking at the highest levels ever despite used car sales in the dumpster for lack of bank loans and also a new kind of society that is developing that doesn’t mind spending more for new cars as long as the finance companies are loaning the cash and making those loans possible. Now it isn’t far off for people to get 30k loans spanning 8 years, which for the repossession business cannot be bad if you can get some work direct from finance companies.
It has just been reported this morning that for the first time repossessions are up. Here is what they had to say:
SCHAUMBURG, Ill., May 14, 2013 — /PRNewswire/ — Experian Automotive today announced that automotive loan delinquency and repossession rates increased in Q1 2013. According to the latest State of Automotive Finance report, 30-day auto loan delinquencies rose 1.3 percent, 60-day delinquencies increased 12.4 percent and repossessions rose 16.9 percent when compared with the previous year.
“Obviously, we never want to see a rise in delinquencies or repossessions, but when you compare the current findings with previous years, they are still lower than the recession-level rates,” said Melinda Zabritski, Experian’s senior director of automotive credit. “As we continue to move forward, we should start to see more increases as some of the subprime loans coming onto the books begin to deteriorate. However, one thing most lenders will agree upon is that today’s subprime borrower is less delinquent than those in the past.”
Findings from the report also showed that automotive repossessions jumped 16.9 percent, going from 0.43 percent in Q1 2012 to 0.50 percent in Q1 2013. While repossession rates for banks, captives and credit unions are all down year over year by as much as 14.9 percent, rates for finance companies increased by 52.1 percent. In spite of the increase, overall repossession rates are still relatively low when compared with the peak rate of 0.71 percent in Q1 2010.
In other findings:
- Total dollar volume of automotive loans grew by 9.6 percent in Q1 2013, reaching $726 billion, compared with $663 billion in Q1 2012
- Banks increased loan portfolios by $20 billion, finance companies by $18 billion, credit unions by $14 billion and captive finance companies by $12 billion
- Average charge-off amounts for defaulted loans were up from $6,739 in Q1 2012 to $7,401 in Q1 2013
- Charge-offs are still well below recession levels, however, as Q1 2009 average charge-offs were $10,126
As you can see they state overall repossessions are still relatively low in comparison to 2010 claiming charge offs are still below recession levels which may be true but the reality is those charge off in recession times were rolled over from the good times.
In any event will things continue to increase or are we becoming a cash buying country?