Weep for the repo man? OK, but know he’s hurting - http://www.sltrib.com/sltrib/money/55922757-79/car-vehicle-fewer-impound.html.csp

Weep for the repo man? OK, but know he’s hurting

 

Credit » Fewer bad car loans, steadier economy aren’t good news for everyone.

By Steven Oberbeck

| The Salt Lake Tribune

   

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 elsewhere in the country, repo men and women were busier than ever. Their impound lots were full of repossessed vehicles and their telephones were ringing steadily as bank, credit unions and finance companies requested they pick up cars whose owners no longer were making their monthly payments.

But these days, with the economy improving, repo men and women in Utah and elsewhere are going wanting for work, their tow trucks idle a lot more than they would like and their lots half empty behind their padlocked chain-link gates.

There are a number of reasons, but one of the biggest is that a lot more car buyers are keeping up with their loan payments.

In Utah, where the unemployment rate is among the lowest in the nation, the percent of automobile loans that are 60 days or more overdue fell 33.3 percent in 2012 compared with the previous year, according to the Transunion, the credit rating agency. Nationwide, the number of automobile loans 60 or more days overdue was down just 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."

Yet out on the streets, the traditional tussle continues between repo men and vehicle buyers who, for whatever reasons, have fallen seriously arrears on their car payments.

"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 scan 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 their payments and voluntarily surrender their keys are the ones he looks forward to meeting. "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 nearly 32 percent from 2009 when the number of repossessions peaked just before the economy started its slow recovery.

Les McCook, executive director of the American Recovery Association, agreed 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 he leads 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 Great 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. And, with fewer cars being financed there also were fewer borrowers falling behind on their payments, which meant that there were few automobiles that needed to be repossessed, said Tom Webb, chief economist for Manheim Consulting.

Webb also noted that as the Great Recession progressed lenders clamped down on their subprime lending. Many stopped offering loans altogether to car buyers with less than stellar credit.

But now, many of those banks and credit unions once again are offering subprime loans. TransUnion reported that 32.4 percent of new auto loans issued in the July-September period were made to nonprime borrowers, up from 30.6 percent a year earlier.

"We’re back to more normal levels," Web said, adding that he is anticipating vehicle repossessions nationwide could rise as much as 27 percent through 2015 as a result of the loosening of vehicle lending standards.

Mike Edwards, who owns Edwards’ Recovery First, said he already has sensed 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."