Many years ago I made a living as a car repossessor. Throughout my tenure in that capacity, I probably collected 1500-2000 vehicles. I hope I can help reduce the stress and a little anguish as well as offer some perspective and money saving ideas.
Lets examine the entire process of an automotive reposession:
The Purchase – The car of your dreams.. or perhaps just a reliable tool to get you from point A to point B. No matter the reason, you made a deal determined your ability to pay, and signed on the dotted line. If you decided to pursue a credit line, you agreed that if you couldnt afford to make payments, the car belongs to the financing organization which gave you the opportunity to purchase in the fist place.
The Contract – There is a lot more in there than simply a guarantee of payment that you agree to. A valid current address is required. If you move to another state, you may be required to ask permission to take your collateral with you. Insurance is always required to protect the financer’s interest. Surrender is a stipulation if you cannot meet your obligations.
Default – You have failed to meet the aforementioned requirements of contract, and now you are faced with a very real possibility of a collection action. (Repossession) It may be you have lost a job, were not realistic when purchasing or whatever. Things happen, and it seems more so in Michigan. So what do we do now?
Here is a list of things which can mitigate the damages to you financially, to your reputation, and emotionally.
1. Communications – Before it reaches the REPO stage, maintain contact with your bank (finance company) and keep them abreast of your situation. Be upfront and volunteer your current address, the best way to reach you, etc.. Give then NO REASON to suspect you will be hard to deal with if surrendering the vehicle becomes a reality. This is critical unless you want to walk out of a store, church, or anywhere else and discover you need to find alternative transportation with kids and groceries in tow. If you are easy to reach, this will likely never happen. In Some cases, you may be able to renegotiate your terms if you have been easy to deal with. the LAST thing they want is to take your car.
2. Reality – This is the hard part. Know when to say when. Face the facts. If things are not looking like they will be turning around, understand that it serves no purpose to fight, and potentially increase your end liability. If there is a great deal of effort in locating you because you are hiding a car (thinking you will be able to get it straightened up ) those charges become your additional responsibility.
3. Preparing for Repo – One of the things that stood out as obvious during my time as repo man, was the condition of the cars when we picked them up. Nearly 80-90% were in a condition that deflated their value to about half of normal book. Remember that you are still on the hook for any difference between what you owe, and what the bank is able to sell the car for. The Banks realize they will not often be able to collect these amounts without great expense, (see #1- may wish to negotiate for a fraction later) but the larger the deficiency after collection charges are assessed, and the sale of the collateral the more likely they will persist with collection efforts later.
Keep it clean – Though the banks will use the services of the auction houses to detail the vehicles prior to sale, these are not inexpensive and add to your potential liability. Plus you may do a better job of detailing thus getting a better price.
Maintain mechanicals – Change the oil and clean the engine compartment. Fix anything obviously mechanically wrong. Nothing says “Peach” like clean oil when prospective buyers are looking at cars to bid on. It says to the buyer “I have been taken care of, and am worth every penny.”
Bottom line is that you still have a bit of control even in the particularly adverse situation with repossession. YOU can help yourself by limiting future liability simply by considering and using the methods above.
Comments are welcome and will be added to the Michigan Survival Guide