Repos Rising As Credit Crunch Tightens

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Many vehicle owners unable to make initial payment
Posted: 3:29 PM Feb 19, 2008
Last Updated: 7:02 PM Feb 19, 2008
Email Address: sixonline@wowt.com

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The credit crunch, already putting a strain on homeowners with adjustable rate mortgages, is also having an impact on that next major purchase, the automobile. Vehicle repossessions are on the rise.

Like the fragile housing market is forcing many to banks and foreclosure, some vehicle owners are struggling to protect their investment on wheels.

"I think it has to do with the housing market,” notes David Jacobs, owner of Ambassador Industries. “People not so much in new houses, but people who have been in their houses whose mortgage rates have escalated, interest rates go up."

Jacobs says right now his staff has to find 500 vehicles that banks want back. "We take cars from an awful lot of really nice people. It's not something that's really fun to do, but somebody's got to do it."

Jacobs adds that the reasons for repossessions are as varied as the vehicles and owners themselves. Still, something is different about this wave of repossessions.

"A little bit more common is the fact that the first payment defaults, which is basically a situation where the customer doesn't make the first payment. They've had the vehicle for two to four months."

Once the vehicles are taken, customers have to personally contact the bank. Many are contacting bankruptcy attorneys like Howard Duncan of Duncan & Davis.

"Their options to protect the car when they're gonna get far enough behind that it's going to get repossessed are really to consider filing a Chapter 13 bankruptcy."

A serious choice, your credit or your car keys, but Duncan makes it plain. "If they're really needing the vehicle to go to and from work and it's a critical item for them to keep, they have to decide which is more important, their credit or keeping the vehicle."

One of the main reasons people end up losing their vehicles, according to experts, is their failure to answer calls from banks.

Ambassador Industries has those 500 cars to repossess, and that's just this week alone.

How do the numbers stack up to last year's figures? Ambassador Industries has seen a 20% jump in repossession requests from banks, compared to 2007.

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Posted by: Anonymous on Feb 20, 2008 at 11:56 AM
I love it when all you "High Rollers" think that middle class citizens don't pay their bills on purpose. Do you think that people behind on their bills want to be in that situation? Of course they don't. The story I seen on the news wasn't showing a bunch of Expeditions, Tahoes, Lincoln's, Vettes or any outlandish vehicles being repo'd - they looked like cars MIDDLE CLASS people would drive back and forth to work. Danielle, KARMA will come back to haunt you, better watch what you are saying and you had better get 6 mos worth of income into the bank in case something happens. I think the banks, mortgage lenders and finance companies should be held accountable for the mess we are in! They are the ones being greedy and soliciting these loans to people who can't afford them! Who in their right mind would pay 18% on an Auto loan anyway? Someone who needs a car to get back and forth to work would I bet.

Posted by: omahan on Feb 20, 2008 at 11:48 AM
their is quite a few opinions here. danielle is partially right. who knows maybe at the time of purchase they had the job and fundings for the car and thought they were good. then they lost a job, or got injured. dont judge a person due to repo. now true there is a certain degree of stupidity involved were the buyer gets more than they can handle and yes that is their fault. but the key is to get the actual payment info. stop and go home. think bout the purchase do some actual number crunches. and then decide when ur away from the delearship where theyll say yes u can afford it even though u may not.

Posted by: John on Feb 20, 2008 at 10:29 AM
This is costing us consumers money also for some to purchase a car and not make the first payment. The value of the vehicle goes down as soon as it leaves the showroom floor and the banks will not be able to get what is owed on the loans and there fore rates for other loans will have to go up to make up the short fall. Its just like the housing problem, with so many forclosures, our property value is droping also.

Posted by: Jon on Feb 20, 2008 at 10:11 AM
I think it's all about the fallout. Everything is connected. I don't think we, being people, should point our finger at a person, but a situation. What you do with that situation is your choice. I don't think (or like to) that anybody woke up in the morning and said "I think I will buy a car without paying for it for 5 months, and get it repossesed". I've had the brown stuff hit the fan with me, too. I dealt with the fallout the best I could. It is a hard thing these people are going through, and yes, Karma is a fickle mistress...

Posted by: TOSHA on Feb 20, 2008 at 08:43 AM
DANIELLE IS TELLING THE TRUTH. YOU SHOULD PAY WHAT YOU OWE OR DONT GET IT.

Posted by: Anonymous on Feb 19, 2008 at 09:54 PM
when people can get a car without making a first payment it is called 'creative financing'. This 'creative financing' has also been used to fuel our housing troubles. To me, this is due to businesses thinking that we all need 2000sq ft houses and 300hp vehicles, since they make the most profit off them.

Posted by: Danielle on Feb 19, 2008 at 07:11 PM
To Brandy: I'd bet money you've had lots of "bad"things happen to you through no fault of your own, right? You make your own way in this world and deal, not whine. I've had my issues but dealt with them, didn't run away from responsibilities. Grow up.

Posted by: DB on Feb 19, 2008 at 05:35 PM
Okay. Something is kind of fishy when you "buy" a new car and can't even make the first payment. Used to be buying a car was a serious commitment that you only made when you were quite sure you could afford it two months from now.

Posted by: BRANDY on Feb 19, 2008 at 05:14 PM
TO: DANIELLE, APPARENTLY YOU HAVE NEVER HAD A CIRCUMSTANCE THAT HAS CHANGED YOUR LIFE. AT ONE POINT THEY PROBABLY COULD AFFORD EVERYTHING THEY HAVE PURCHASED! KHARMA IS AROUND THE CORNER FOR YOU.

Posted by: J on Feb 19, 2008 at 04:42 PM
Perhaps I'm missing some details, but if an owner can't make the FIRST payment, why in the world would the bank or lending agency approve the loan in the first place? Did the finances change in 2 - 4 months, so that people can't make the payments, or did someone pocket the fees from making a loan that never should have been made in the first place? And back to the purchaser - why would he or she commit to making payments they KNOW they can't make? Isn't that fraud? Unless all these people lost their jobs within 2 to 4 months, I have no sympathy for the banks or the purchasers of these repo'ed cars in the situation reported here.

Posted by: Danielle on Feb 19, 2008 at 03:55 PM
How about not buying something you can't comfortably afford? People deseve what they get when they made irresponsible financial decisions. Say no to credit card offers, no to new cars, no to mansions when you don't make the bucks to pay back what you owe.