Times are tough for the repo man, but if history is any guide, the days of few tows can’t last forever.
Five years ago, as the Great Recession took its toll on consumers in Utah and nationally, repo men and women were busier than ever. Their impound lots were full of repossessed vehicles, and their telephones were ringing steadily as banks, credit unions and finance companies requested they pick up cars whose owners no longer were making monthly payments.
But these days, with the economy slowly improving, the repo man is wanting for work, tow trucks idle all too often and lots half-empty behind padlocked chain-link gates.
The fictionalized version of TV and film may still roam the streets, but for many reasons the real-life counterpart just isn’t as busy. Chief among them is the fact that more and more car owners are keeping up with their loan payments.
In Utah, where the unemployment rate is among the lowest in the nation, the percentage of automobile loans 60 days or more overdue fell 33.3 percent in 2012, compared with the previous year, according to Transunion, the credit rating agency. Nationwide, the number was down 10.4 percent last year.
What is good for the economy and consumers, though, isn’t necessarily good for the repo industry.
“I’ve been in this business for more than 30 years. There have been ups and downs, but this is the worst I’ve seen,” said Rich Whittaker of West Coast Recovery Services in Salt Lake City. “Everybody is fighting over what little business is out there.”
That’s not to say that out on the streets the traditional tussle between repo men and behind-on-their payments vehicle owner has gone away.
“Some people seem to be getting smarter about hiding their cars from us,” said veteran repo man Nolan Edwards, who works at his family’s business, Edwards’ Recovery First. “But we’ve gotten smarter, too. We now are using a camera system on our trucks that scans every license plate that we pass and will let us know if that vehicle needs to be picked up.”
As always, Edwards said those owners who are behind on payments and voluntarily surrender their keys are the ones who make his job easier. “Those that try to hide their cars — they are the ones who cause problems for everyone. You hate to deal with them.”
Nationwide, an estimated 1.3 million vehicles were repossessed last year, according to Manheim Consulting, which tracks automobile industry data. It was the lowest tally in 12 years, and down 32 percent from 2009, when repossessions peaked just before the economy started its slow recovery.
Les McCook, executive director of the American Recovery Association, agrees that the industry is at a low point.
“We know of some [repossessors] who had been in the recovery business for 40 to 50 years and are just not around anymore,” McCook said, noting that the association has seen its membership since the Great Recession began drop to 268 companies, a decline of nearly 11 percent.
The repossession industry always has been cyclical,McCook said. In the past, it typically trailed what was happening in the national economy by six or seven months. “We’d lag behind when times changed to good, and we’d lag behind when the economy would turn down.”
The recession and the slow economic growth afterward, though, set the stage for some particularly tough times.
During the recession, the number of new and used car sales plummeted. The rising unemployment rate meant that there were fewer qualified buyers and fewer cars being financed. That meant there were fewer borrowers falling behind on their payments, which cut down on the need for repossessions, said Tom Webb, chief economist for Manheim Consulting.
Webb also noted that as the Great Recession progressed, lenders clamped down on their subprime lending — giving money to buyers with risky credit histories or to those with little visible means to pay back loans. Many stopped offering such loans altogether.
But as the economy has steadily improved, many of those same banks and credit unions once again are going the subprime route. Trans-Union reported that 32.4 percent of new auto loans issued in the July-September period of 2012 were made to nonprime borrowers, up from 30.6 percent a year earlier.
“We’re back to [earlier] levels,” Webb said, adding he anticipates that vehicle repossessions nationwide could rise as much as 27 percent through 2015 as lending standards loosen.
Mike Edwards, who owns Edwards’ Recovery First, said he already is sensing a turnaround.
“While we are not anywhere near where we were just before the recession began — we’re still down about 30 percent from those levels — we are back to what would have been a more normal level before that boom began,” he said. “And that is reassuring to know that we’ve managed to survive.”
Facing repossession? What you need to know
Talk with your lender first • It’s easier to try to prevent a vehicle repossession than to dispute it after the fact. Contact your lender as soon as you realize you will be late with a payment. Many will negotiate if they believe they will eventually be paid.
Don’t waste time • If your car is repossessed and you want it back, contact your lender as soon as possible. Remember, you’re losing money every day your car is in impound.
Don’t forget your personal property • A lender may not keep or sell any items found inside the vehicle. If your lender can’t account for articles left behind, you may want to speak to an attorney about your right to compensation.
Keep the car or let it go • If your car has been repossessed, it’s time to ask yourself if you can really afford it, or if you will be better off letting it go and getting something more affordable.
Source: Federal Trade Commission