Vehicle defaults on rise in counties
By Catharin Shepard
Published in News on December 8, 2008 1:46 PM
Automobile repossessions have increased in the past several months, and it's not just high-end sports cars getting the hook.
"I went from picking up five cars a day to 10 cars a day," said Eddie of Final Notice Recovery, a repossession company in Smithfield. Eddie declined to give his last name due to the nature of his business.
On the West Coast and in the Northeast, vehicle repossessions have increased as much as 30 percent, said Jason Hoard of Chief Financial Services in Richlands.
The increase of repossessions in eastern N.C. is "not a big jump like we've had in the rest of the country," Hoard said.
But there has been a noticeable trend since September.
"Everything's up across the board, I'd say by about 10 percent," he said.
Although luxury vehicles from companies like BMW and Mercedes-Benz are among the many makes and models recovery companies are picking up with increasing frequency, Hoard said he is retrieving more Kias and Suzukis than anything else.
While bankruptcies and repossessions are frequent, some borrowers are simply disappearing off the map to avoid paying their bills.
"We're seeing more charge-offs than anything. They can't collect anything because they can't find anyone," said Hoard.
Charge-offs occur when a lender establishes that they cannot recover the cost of a vehicle loan and instead write it off as a lost cause.
The unpaid amount of the loan is placed on the borrower's credit, so they cannot purchase another vehicle or make any other credit-based purchases until the previous debt is paid off.
The increase in charge-offs is driving many smaller dealerships in eastern N.C. out of business, Hoard said.
If a borrower is in dire financial straits and cannot make his payment, Hoard said the best thing to do is to call the lending institution.
"Let them know your situation," he said.
BB&T market president Jimmie Edmundson said his bank has not seen a recent increase in repossessions.
"I haven't seen one in the parking lot in two months," he said.
Although the bank has seen customers who have had late and missed payments, it's not anything alarming, Edmundson said.
Lenders promising loans for vehicles despite a borrower's past credit problems might be repossessing more vehicles than banks that follow stricter lending policies.
"You see places that say 'bad credit, no problem,' but bad credit is a problem," Edmundson said. "I would suspect that those companies are seeing an increase."
Repossession companies are not exempt from struggling in a tough economy, and the increase in repossessions is not padding their pockets. Eddie said fuel costs for his two tow trucks are nearly $10,000 a month, and his insurance has increased to $30,000 a year.
"You don't know how many bills I get," he said.