Repossessions are increasing and will continue to do so.
It’s not that complicated. As Daniel Blinn, the managing attorney of Connecticut’s Consumer Law Group put it, “In difficult financial times, repossessions will go up.” And these are difficult times to be certain.
It is important to realize, however, that this isn’t an issue entirely borne out of the pandemic. That’s because, in early 2020 just as the pandemic began, American consumers held an unprecedented amount of auto debt. Indeed, something approaching 116 million consumers had an auto loan, a 40% increase from ten years before. That’s a lot of loans and a lot of people a few missed paychecks away from defaulting.
Auto loans are not like student loans and home mortgages in that the federal government does not regulate them, meaning they cannot intervene with lenders during severe economic downturns as they can with other types of loans.
But in the early months of the pandemic, lenders took it upon themselves to offer their borrowers some relief. They did this by offering deferments and even halting late fees, which led to the lowest auto loan default rate in something like 15 years.
According to Teresa Murray of the US Public Interest Group, however, that grace seems to be running out and lending institutions are back to calling in loans and repossessing cars. “Because things are bouncing back, I think that these banks feel like they have space to come down a little harder on consumers,” Murray said.
Throw in the fact that many of these are sub-prime loans, enhanced federal unemployment benefits have ended, stimulus checks have dried up, and states have rescinded their restrictions on repossessions, and we have a recipe for a significant uptick in repossessions over the next year.
As Repossessions Increase, So Too Will Industry Scrutiny
Obviously, lending institutions, repossession networks, and officers themselves will not be cast as the hero in this story of default and repossession. We’ve talked many times before about the low regard in which most people hold the Repo Man, and this perception is only going to deteriorate further as people lose their cars.
Already, news stories have emerged detailing the unfair (and sometimes illegal) practices of lending institutions and the repossession teams they utilize. Now, this isn’t a huge problem for repossession networks—they don’t need to be anybody’s hero to get paid.
But in a time when so much attention is being paid to the industry, Repossession Networks need to ensure their members are above board, operating in line with federal and state laws, as well as industry best practices. This will help them secure contracts with lending institutions and ensure their reputation is not besmirched by an unscrupulous operator.
Repossession Lot Inspections help Repossession Networks do just that.
TrendSource has long been an industry leader in Repossession Lot Inspections, helping Networks vet potential members. This is an invaluable service that helps individual repossession officers document their compliance with federal regulations as well as providing Networks with an in-depth look at potential members’ operations.
As repossessions increase, so too will industry scrutiny. TrendSource Repossession Lot Inspections help networks and officers withstand that scrutiny through compliance documentation.