Expert Article Library
by Peter Conrad CARS, ATP, CFI, CFII, MEI, Comm SEL-SES, PI
By Peter Conrad, Repossession Expert Email: firstname.lastname@example.org
Self-help repossession is by far the most cost effective way for any auto finance company to stop further losses from a bad loan, rental, or lease, short of replevin. Having said that, everyone, no matter what business or industry theyre in, always is interested in staying as far into the black as possible.
For the repossession industry this desire (of the finance companies) has had a deep and far reaching impact.
The result has been to turn every repossession company across the country into a commodity. To be bought and sold with only one thing in mind...Price. This casting of the repossession agency in the role of commodity has a name...Contingency.
Contingency work has made up the bulk of the repossessors workload for years. The contingency idea at its heart is pure simplicity. Repo agent gets order, goes to address(s) provided, recovers vehicle, and gets paid. Not recovered, not paid...Simple. But what happens in practice is far from simple, safe and serene.
Yes, a very simple chain of events indeed .
1. Repo agency gets order:
a. This same order was assigned to1--4 other repossession companies, all have
run the very same address -- all with the same results:
i. Wasted time
ii. Wasted fuel
iii. Residents at these address highly upset, after all, theyve been visited by four
different repossession agencies, all at odd hours of the day and night, all asking the
iv. 6-10 of these types of orders and you too would begin to feel the pressure of
b. Multiple addresses: Because the work is contingent (i.e., no close fees), why not
throw every address at the repo company? After all, it doesnt cost anything. Results:
i. Again waste of time and fuel
ii. Because the finance company or middle man (forwarding company) who assigns the
order to the individual repossession company is throwing every address at the
repossession agency, you get some very old, dated addresses. Not only for the
owner of the vehicle, but sister, brother, cousin, aunt, uncle, friend, second cousin.
You name it; not only will it be a bad address, but an old bad address of a second
cousin who lived there 5 years ago!
iii. More desperation.
iv. A need to get the vehicle ... no matter what.
c. Other out of date information: Phone numbers, work address, etc . You name it, and its wrong or old. Why? Because theythe finance companies, lienholders, or their surrogates (re: forwarding companies) didnt bother to verify information; again because it doesnt cost them anything to run bad information. It only costs the repossession company. So why not?
i. More desperation
ii. A need to get the vehicle no matter what.
2. Repo agency works the order:
What goes on here is pretty straightforward: most agents get the lion's share of their work from forwarding companies. With these orders all the disincentives (see above) are at play here. But those are just some of the negatives in the current state of affairs in the repo industry.
Required updates on each account. Many, if not all, require a written update within 24 hours of receiving the order, thereafter, every 23 days. The forwarder expects each account to go to all addresses provided. Is this practical? In theory yes; in practice, almost never. With ever shrinking profit the agent is forced to group accounts together to make best use of his time and resources.
But what about the required update? If the agent has not visited the address, what happens? The forwarder reassigns it.
So the agent has learned a very important skill, now so prevalent in the industry. It probably makes up 80% of the updates that go straight to the lienholder. The agent lies. The narrative goes something like this: Went to 123 Main Street, house with attached garage, no unit spotted. Well, so what? With so many updates due and so few resources, the repo man is further stretched for time and money, and this time truly for nothing.
Finding the vehicle!!
Even with all of this, the deck may be stacked against the repossession agent but still more often than naught one of the addresses is good, and he was the first of four (at least) to arrive at the right time to affect the repossession. But this is one of those SubPrime lenders whose high interest, massive late fees, and with a customer who is not the type to be unfamiliar with, or surprised by a visit, from the repo man.
Its a subprime loan, so what? Well, most of time, nothing, but not always, and with fees, interest, and the prospect of not getting to work on Monday, the repossession agent is not the only desperate one.
So now, we have two desperate people fighting over the same vehicle. What is the outcome?
You dont need much of an imagination to come up with the answer. Assaults, injuries, and even death can and have occurred. Many laws exist to protect the consumer against predatory loans, and more are proposed. But with the danger of repossession contingency pricing is real, and its effects are being felt in every repossession that occurs nationwide. The effect is to promote, and to even force some repossession agents to commit some spectacularly outlandish and illegal acts, all under the banner of 'self-help repossession.
The forwarding company is here to stay and should. The causes of many cases of violence during repossession are not due to the presence of these companies, but rather the desperation, bred by contingency pricing.
Virtually every case Ive been involved (as an Expert Witness) has been tainted by this peculiar form of desperation.
The invisible engine driving the violence, all hidden. Much like the great wizard of Oz, all controlled by the man behind the curtain.