One of my guilty pleasures in life is YouTube, where anyone with a computer can create their own channel. It might be a guy living out of a motorhome and driving cross-country or a car detailer with OCD, but once I find something that peaks my interest, I will “binge” watch all their videos on a channel.
This month I found a channel of a repo guy in Utah. He wears the camera to protect himself, and what he captures is amazing. Most of the vehicles he repos are purchased at sub-prime used-car dealers that prey on people with bad credit.
Typically, RepoNut (YouTube name) gives the owners a last chance to remove their stuff from the vehicle once it is on the hook. During this part of the repo, the owner typically gives their reasoning for why they fell behind. Some are very angry, some beg, but most are brutally honest.
Most of the cars repossessed have body damage, bald tires and driveablity problems. But, what truly amazes me are ages of the vehicles. Most of the vehicles are 10 years or older, and some are not even running. A lot of the time, the reason the person falls behind on payments is because they had to pay a repair bill (typically because of poor maintenance). Or, the vehicle dies and they stop making payments. In some cases, they bought an older luxury like a Mercedes, BMW or Audi, and they can’t afford the price of a repair.
Not too long ago, older cars with 100,000 miles were considered to be high-mileage clunkers. The suspension bushings were shot, the engine might be burning oil, and the transmission might be starting to slip. The price on the windshield at a used-car lot typically reflected this risk. But, most problems were inexpensive to fix.
Back in the 1990s, used-car loans were for vehicles that were only five years old with low miles. Now, it is easy to find financing for 10- or 12-year-old vehicles, and mileage is not an issue. Often, these loans are for four to five years.
Modern vehicles at 100,000 miles are barely broken-in. Chances are they have not needed any major repairs, and it can still feel like a new car to a new owner. But, the repairs can be very expensive for a person living paycheck to paycheck and paying a car loan.
But, I think that this has a greater impact for shops. Instead of an owner budgeting for repairs, they are making payments. When a repair is needed, they put it off until the safety and reliability of the vehicle is compromised.
What if the used car bubble burst? What if states started to look at these used car sub-prime loans in the same light as “pay day” loans? In my opinion it could mean more realistic used car prices and maybe more people buying vehicles and taking pride in ownership instead of trying to avoid the repo man.
