Car repossession business is booming amid downturn

December 15, 2008

For many sectors of the country, the car repossession business is experiencing a substantial boom as a consequence of America’s current economic crisis. Some of these specialized businesses run with multiple agents who are tasked with collecting vehicles from people who have been repeatedly late of have not paid their auto loans.

In fact, this new increase in the number of active auto repossession services is directly linked to the rising numbers of consumers with delinquent auto loans. Major credit reporting agency Experian’s automotive division conducted a study that indicated 2.48 percent of auto loans were 30 days past due in second quarter of 2008; that is a 9 percent increase from the previous year.

Additionally, Experian Automotive noted that the percentage of auto loans more than 60 days past due was 0.75 percent. The recent number represented a 11.9 percent rise from 2007.

With such figures representative of a large number of consumer loans, banks are clearly uncertain how to handle the current state of affairs. With so many cases of delinquency to content with, many institutions are foregoing extreme measures like repossession and are instead trying to negotiate with borrowers.

Regardless of such mitigating measures, the holidays remain a prime season for repossessions. This is the time when people are struggling the most financially, even during better times. The only comfort is that most banks will not allow vehicle repossessions on Thanksgiving or Christmas.

Repossession is still an extreme measure, used only when efforts at negotiating with the owner fails or payments are not being made. It is ultimately a financial loss to hire the repossession agent to regain the vehicle.

As the recession continues to take hold for the long term, it will come as no surprise that repossession will remain a steady profession for the foreseeable future.