Auto Loan Crash? Lots Are Overflowing With Repossessions

We’ve been hearing lots of rumblings about an auto loan crisis waiting in the wings, and now USAToday says that lots are overflowing with repossessions.

So many vehicles are being snatched from owners who stop making payments that some repo operators and auto auctioneers say lots are overflowing.

This year’s predicted 10% rise in vehicle repos to 1.6 million would be a third higher than 10 years ago, says Thomas Webb, chief economist for a unit of Atlanta-based Manheim, which sells cars to dealers worldwide. The increase comes atop a 10% rise in repos last year.

Webb blames overly “generous” auto loans in the past couple of years as a key factor in driving up defaults that lead to repossessions.

“We’re experiencing significant growth in repo volume to the point where we’re using additional lots to store them,” says Tom Kontos, executive vice president of Indiana-based Adesa Auctions. “Our inventories are growing to record levels,” caused by repos on top of a glut of cars coming off leases and out of rental service

One group of people who are happy? Locksmiths. They make new keys for the repo’d cars and business is booming.

Repo lots overflow with reclaimed cars [USAToday]


Edit Your Comment

  1. ptkdude says:

    This makes me really happy that I paid off my car last year!

  2. UpsetPanda says:

    I’m still not sure how people think they can just stop making payments, like if you ignore it, it’ll go away. Is this really a case of people still buying things they can’t afford? I look at purchases as investments…am I going to regret this if I don’t make as much money four months from now, is there a way to get my money back if I get into that situation, and do I actually need it? Health insurance doesn’t solve one or two, but I sure need it, so that makes up for not making rules one and two. A new car? Mine is nice, it tuns really well. I don’t need a car, can’t get my money back, and I’d probably feel like crap about driving a nice new car that I’m plunking $400 a month into if I didn’t make $400 more like I used to.

  3. friendlynerd says:

    I don’t want to buy this car. It smells of failure.

  4. Anks329 says:

    hmm… it is possible for someone to buy one of these repo-ed cars?

  5. laserjobs says:

    Woo Hoo!!! Cheap cars for everyone with cash!!!

  6. B says:

    Good time to buy a new car, it sounds like. Maybe I can get a repoed BMW on the cheap.

  7. DashTheHand says:

    Wishing there were more repo auctions in my area. =(

  8. Silversmok3 says:

    This is due to the subprime mortgage mess , to an extent, because if you have to choose between paying the mortgage or the car note, guess which bill people skip?

  9. Parting says:

    I’m so happy I bought inexpensive, used car with the help of my family (I know nothing when it comes to cars :) Now I own about 2k to the bank, since I paid everything else already.)

    I did consider renting or buying new, but it was too pricey. Long term, I wasn’t sure if I wanted this kind of burden of monthly payments. Even a good basic car turn out to 400$ per month, once you add everything. (Half a month rent, here in the city).

    People who get repossessed are usually the same ones who rack up credit card debt by dozens $K.

  10. winstonthorne says:

    I don’t understand why banks repo cars so much faster than anything else; they usually take an enormous hit by selling the things at auction and writing off the value gap (because you KNOW someone who didn’t make payments on a car they had isn’t exactly going to be eager to pay for something they no longer own).

    Like the mortgage lenders, these banks need to stop giving away so much high-risk credit and focus on refinancing/rearranging their current accounts with their customers. If someone can’t afford a car payment, perhaps it would be worth the lender’s time to knock the interest (and therefore payment) down a bit rather than incurring the cost of a repo, selling the car, and charging off the value gap.

  11. ConnertheCat says:

    Damn, I’m buying a car next week – I’d love to wait though and snag a killer deal.

  12. B says:

    @Anks329: Repossessed cars are sold at auction, and it is possible to buy them there. You can inspect the cars, but you can’t go for a test drive or anything. Knowledge of the Kelley blue book value of whatever you’re bidding on is necessary, and you can’t be certain of the car’s repair/maintenance history, so there is a fair amount of risk. You will be bidding against auto dealers, who know what they are doing.

  13. Parting says:

    @Silversmok3: Why people just sell/transfer loan to someone else? There is a lot of websites for that…

  14. rbb says:

    Just be aware of a huge hidden cost of buying a repo – trying to buy a replacement key/dongle from the manufacturers’ dealerships. Thanks to the anti-theft devices present in the key and/or dongle, you can only get a replacement from the dealer. Prepare to pay hundreds or even thousands (Mercedes comes to mind) for a second key.

    The days of a locksmith just cutting a new set of keys or replacing the tumblers is long gone.

  15. Honus says:

    Yes but do they come with that “new repossession” smell?

  16. Laffy Daffy says:

    So will this push down prices for used cars?

  17. CuriousO says:

    Yey!!! Bush will bail them out on this one too!!!!! Yey!!! for being irresponsible!!!!

  18. ManicPanic says:

    @B: My mom works at an auto-auction in Florida and they had one of those super-fancy Mercedes that looks like the one that Trump has come through. It sold for like a third of what it would have been new. There were no problems with the car–same as with the houses, someone overleveraged themself.

    The particular auto auction she works for is only open to dealers (new or used–doesn’t matter as long as they have the license) so if you can connect with one of them that could be a way to get your Bimmer.

  19. shadow735 says:

    I thought everyone was using their home ATM machine to buy cars.
    So what happens to those cars do they go to auction?
    What about Bikes, I am looking to buy a Harley Davidson Bike.

  20. @B: All good advice, but I wouldn’t worry as much about the Auto Dealers. A lot of them are falling flat on their face due to low sales which means they already have high inventories. I guess that depends on your market though.

  21. Sndtrkman says:

    Great, I just bought a new “used” car yesterday from Saturn. The good thing is that my bank’s loan percentage was wayyy better than what the dealership was trying to offer me. Plus, I don’t have to worry about missing any payments because it will automatically get deducted from my account. If I had to choose between a payment book or auto-pay, then I will definitely choose auto-pay no matter what.

  22. lostsynapse says:

    Next thing you know pissed off car owners will be pulling out the oil plug and going for a drive.

  23. loganmo says:

    So now I can buy a re-po car to drive around on Sundays and tour all of the forclosure open houses? Woopee!!!!

  24. ekthesy says:


    The cars from repo auctions don’t come with keys when you buy them? WTF is up with that?

  25. B says:

    @ekthesy: Typically the repossessing agent doesn’t get the key from the borrower, so a new key has to be cut and the locks replaced. And with new cars, they need a new clicker/receiver.

  26. jaydez says:

    Getting a dealers license in some states is very easy. My grandfather used to have one just so he could by cheap K-cars, at auction, after they stopped making them. He loved the things and wanted to drive nothing else.

  27. schmoozer says:

    i am leasing a toyota sienna from Toyota financial; turns out the car is a lemon, and i am having all sorts of problems… when i spoke to the people at Toyota Financial about getting out of the lease; they told me just to stop paying the lease payments and they will take the car away… of course i didnt want to ruin my credit by doing that… but it is still very interesting suggestion coming from Toyotas bank

  28. bohemian says:

    I should not be giddy at other people’s misfortune. I’m just hoping some money we may be getting this summer comes through, we need a good second commuter car.

  29. fostina1 says:

    what you thought home loans where the only predatory lenders. i had to walk out of the car lot 4 times before they would give me the price i wanted. i wound up cutting my payment more than half.

  30. Falconfire says:

    This was being reported on 1010 winns in NY. The biggest violators…. not surprisingly affluent people living well beyond their means.

  31. snoop-blog says:

    @UpsetPanda: maybe they lost a good job that could be replaced in time. there have been a lot of factories laying off in my area. not everyone is living beyond their means. some are just not as fortunate as others.

  32. lowlight69 says:

    why do i feel so good about driving my 96 honda prelude?????? oh yeah, its all payed for, gets decent millage and its a honda so repairs are few and far between. :) why anyone would buy a new car i just don’t understand….

  33. remusrm says:

    i got a focus se and had major issues that i am scared to drive over 60… i am really considering giving it back and taking the hit since ford told me good luck and the dealers unless the car is not starting will not do nothing and tell me “could not replicate the problem” or all is good

  34. grebby says:

    By no coincidence, USA Today published a story Monday about manufacturers now offering 7-year loans on new cars. Buy a car, four years later you simply MUST have a new car, but you’re still upside-down and so you roll the old balance into a new 7-year loan. Repeat a couple times and suddenly you can’t afford payments on any car at all.

  35. theblackdog says:

    @lowlight69: 97 Hyundai Elantra owner here, still getting 28 MPG mixed city and highway. All paid off since 2003 (bought used in 2000).

    I should ask my cousin who goes to these auctions if there has been an uptick in the sheer number of cars lately.

  36. ManicPanic says:

    @ekthesy: If they come from an auto auction for dealers, they do have keys. You can’t drive them, but they do have drive the cars through the lanes for dealers to bid. Well, that and to prove they run ;-) They do an inspection by an independent third party who rates the body, details body damage and the interior. You can check that out before the auction on the run lists. Generally the auctions have someone on-site who takes care of the key issue. But again, this is at a bigger dealer-only auction so they have lots of resources.

  37. redhelix says:

    Dudes, don’t get any ideas. A good 75% of the time,Repo’d cars = man-made lemons. The previous owner just up and stopped paying for the car. What makes you think they spent the additional cash to perform regular maintenance?

  38. ManicPanic says:

    I should also say that while this auto auction has a lot of repos (their own and dealers’) it is not a repo-specific auction.

  39. econobiker says:

    @chouchou: Because if folks are stupid enough to get their car repoed they usually got a bad deal to start with- upside down on prior vehicle, paid too much than car is worth, etc that the buyers don’t want to transfer the loan.

    shadow735- traditionally Harleys have held their values such that there is not a mark down on them, alot of folks modify the stock bikes – which actually can reduce the value/price the used purchaser is willing to pay,

    and the fact that motorcycles tend to be easier to “get stolen” should the payments get too hard to handle- any noodle head can completely strip a cycle and sell off the parts versus cars which are easier to recover and rebuild.

  40. econobiker says:

    @redhelix: That is what I thought also. These could be lower on the automobile food chain than rental or leased cars depending on owner.

    That said I once saw a car get repo-ed whose owner had just put new tires on it two weeks prior. He was crying about getting the tires off and the policeman who had to be called said tough- unless he had wheels and tires to match right now- he was SOL.

  41. “Into each life, some rain must fall” – Ella Fitzgerald and The Ink Spots

    “April Showers Bring May Flowers” – inane saying I’ve never felt the need to use, much less attribute.

    You: I’m not gonna pay my car payment on my BMW 328i, because I have to make the mortgage payment on my subprime loan or I’ll lose my house, and really, my job only pays me so much.

    Repo Man: Then I’m gonna take your BMW 328i back to the lot, and we’re going to sell it for pennies on the dollar. Don’t feel bad though. We’re gonna come after you for collections and ruin your credit. Oh, and all of your neighbors are having the same problem.

    Mercenary Me: I will enjoy buying your lightly used car for pennies on the dollar. I will make the payments, because, I bought for pennies on the dollar. And your tomfoolery has allowed me to buy more car than I could normally afford, but to do it within my budget. Thanks for blazing the trail.

    If you’re interested in housing, give it a few months and you can work the same thing, only with a bank replacing the repo man.

    Sad state. Of education and financial literacy.

    Bottom line: Don’t play games where you don’t know the rules. All of the rules.

  42. frink84 says:

    sweet, ill be in the used car market soon, hope i can find some cheepness!

  43. Anitra says:

    @remusrm: Try going to a mechanic other than the one at the dealer. You can try the Mechan-X Files for recommendations for a good mechanic in your area.

    Tell them exactly what kind of issues you’re having, and if they tell you they can’t replicate it, try ANOTHER mechanic.

  44. Snarkysnake says:

    As the supply / demand equation becomes more favorable for customers, I hope that they really put the screws to dealers that tack on rip off fees (like dealer prep -it’s a FUCKING COST OF DOING BUSINESS) and “market adjustment” fees and the like. Hate that folks are losing their wheels , but love seeing dealers lern their manners…

  45. woodenturkey says:

    2001 Dodge Neon – paid for 4 yeara
    1997 Honda Accord – Paid for cash last week

    Never, ever,ever,ever,ever,ever,ever,ever going to finance a car again.

    If the motor blows up, i am just going to pay cash to repair it,because now with out a car note i can afford to save!

  46. woodenturkey says:

    When i bought my wife a Honda, i brought in cash, and every markup i didnt like i told em i would leave if they didnt remove it. they wanted $550 for a document fee. I paid cash it was one fucking piece of paper.

  47. econobiker says:

    @Snarkysnake: Hate those fees too. Just laughed when they tried it the last time I ever will buy a new car (ex-wife’s SUV)

  48. siskamariesophie says:

    @friendlynerd: …and additionally like an ashtray.

  49. bohemian says:

    I used to get no end of crap at one place I worked for driving an older econobox that was paid for. The people giving me no end of crap are the type that live way beyond their means. The sweet irony is that those same people are probably facing the financial meltdown of their McCastle mortgage, new car loan and piles of credit card debt.

  50. ManicPanic says:

    I know I put this story up before but now it is time once again:

    I knew a person (really not me) who bought a mid-size SUV. Brand new. Took it home for a couple of weeks.

    Realizes they couldn’t afford the gas-called and harrassed the dealer until they took it back. (and they did) Got a brand-new large sedan as a trade. Takes this home for a couple of weeks.

    Realizes they cannot make the payments when the bill comes. Calls up the dealer and squaks until they take it back. (and they do)

    Gets a brand new mid-size sedan. And this was before the price of gas SKYROCKETED.

  51. ManicPanic says:

    @bohemian: I did too. That person I described above-when I told them I was looking for a car but trying to save as much as possible before I got a new one-they said “I just do it! Life’s too short”. Man am I glad I didnt’ listen to that advice!

  52. Canoehead says:

    When I bought my car, it was actually cheaper to finance than to pay cash, and that is factoring in the costs of funds over time, etc. I am convinced that GM is a finance company that happens to give away cars – good deal for me, bad for them I guess.

  53. MARTHA__JONES says:

    @UpsetPanda: I’ve had a car repossessed. It’s not something I’m proud of. I can tell you that if others are like me it’s not about buying things you can’t afford. My car died, I live in a city with no public transport and it was impossible to get me to work and my husband to school with one car – the schedules didn’t work.

    With the outrageous school loans we both have and the rising cost of living there came a point where we had to ask for help. We did, but when we mailed in the check which would have paid what was overdue plus 2 months we were told it was too late, despite the fact that there was no notification of that fact.

    I’m not justifying this, it was a few years ago and I think about it almost every week. I should also note that we didn’t buy an expensive car, we bought a small, reliable used car with good gas mileage because we knew our finances were tight.

  54. MARTHA__JONES says:

    @DashTheHand: Find a dealer, there are people who specialize in this. You let them know what you are looking for and they call you when they get one in.

  55. majortom1981 says:

    I bought my 2004 toyota corolla new because all my used cars had high maintanance bills a month. I actually got the car f0r $500 less then what the dealer paid for it because we caught the finance guy right at closing time and he was late for picking up his daughter at dance class.

    With loan payments this car has been cheaper in the long run.

  56. MYarms says:

    Where are all these so-called overflowing car lots? I’ve got cash and I’m in the market for a car. Somehow I don’t think I’ll find a VW diesel in one of these lots though.

  57. MrEvil says:

    Most repo cars end up in auctions in larger cities and are bought up by used car dealers. That’s how all the little tin shack used car lots end up with any inventory. As far as I know the auctions are open to the public so you can snag a pretty good deal, the problem is finding them. I’m sure that information can be found for free on the intarwebs.

  58. seth1066 says:

    I’m a wholesale automobile dealer. To correct the quoted article, Manheim does not generally sell cars, they facilitate the auction process between the seller and buyer. They also act as a clearing house for funds, the buyer writes a check for the car plus the auction fee to Manheim and Manheim issues their own check less the auction fee to the seller.

    As far as the very late model Mercedes being worth 1/3 of new? Only if there was body and/or mechanical damage or a ton of miles on it. There are no steals at these auctions; the market forces of the open cry auction process won’t allow that to happen. What you see much more of is dealers paying more than they really should.

    All cars including repo cars at any normal non-salvage auction have keys. There are much smaller repo only auctions that may have keyless units, but it is mostly garbage cars. Why would the finance company attempt to sell a decent car that no one can see run and drive?

    Cars are generally sold “with a drive.” This means the buyer after winning the bid gets a gate pass to take the car out on the highway for a test drive, if any mechanical repair is needed that would cost over $500, the buyer can then take the car to arbitration where it will be determined what the mechanical status is and if the mechanical defect claim is legit try and get a price adjustment. If no price adjustment is offered by the seller, the buyer can pass.

    Many auctions offer the post purchase inspection mentioned, which will determine the mechanical health. Depending on what plan is purchased. the auction will stand by their report for up to 14 days, after which if something is determined to be wrong, the auction has to take the car back. The auction, who now owns it, will then sell the car the next week with an announcement of the defect(s) or sell it “as is.”

    Repo’s are not announced as such, one just assumes when GMAC, Mercedes-Benz Credit, etc. are selling a consignment of cars it is mostly off lease and rentals (the rentals are obvious because of the options) with a small percentage of repos mixed in. The dealers could care less which is which.

    On any given Friday, the Manheim Auction, Manheim, PA, one of about 54 Manheim auctions in the US, offers up about 7,000 to 9,000 cars in one day. When they hold a Thursday Exotic High-Line sale the combined two day total can be as high as 16,000 units. The auctions are dealer only and all dealers have to be pre-registered. The sales rate runs about 47% to 65%.

    You can view the size of this monster by keying in:

    1190 Lancaster Road Manheim, PA 17545 in Google maps or better: [] and click on the birds eye view. Anything that is not green is part of the auction.


    The used car business was around 370 Billion dollars last year.

    Where did car dealers originally get their bad rep? Read Chapter 7 of Steinbeck’s “The Grapes of Wrath.”

  59. jamar0303 says:

    @lowlight69: “why anyone would buy a new car i just don’t understand….”

    So true. How else would anyone be able to get an affordable Nissan GTR?

  60. SpecialEd says:

    I think everyone should buy a new car. So I will have more used cars to choose from.

  61. @UpsetPanda: “I’m still not sure how people think they can just stop making payments, like if you ignore it, it’ll go away.”

    I had a friend who did EXACTLY this with her car payments, like five years ago, and she’s STILL pissed that they came and “stole” her car when she “didn’t do anything.” She’s a reasonably intelligent individual, so I really don’t know where the disconnect is, but she is mortally offended that when she stopped making payments (and ignored the problem), they repoed her car.

  62. Chigaimasmaro says:

    @Eyebrows McGee: That disconnection or breakdown in commonsense might come from the idea that people think buying a house and a car is like buying a large appliance or a tv set. Buying a car, doesn’t carry as much weight as it did in the past. Before you had to start out with a crappy car because thats all you could afford and until you COULD afford the newer car, you just dealt with the clunker. Now its just a matter of finding a place thats gonna create a loan for you.

    That ideal removes a lot of previously conceived notions. One being, that YOU don’t own the car until you pay off the bank that gave you the loan. A great many people think THEY are the ones that actually OWN the car. ALthough people with a firm grasp of reality know the truth.

  63. Jaysyn was banned for: says:


    Take it to another mechanic to discover & “validate” that there is actually a problem with it, go back to the Ford dealership & ask them to fix it. If they won’t do that take them to small claims court for breach of warranty contract.

  64. econobiker says:

    @Eyebrows McGee: Yeah- so many people fall for the “big volume” auto dealer commercials. Way I figured it was that the bank would own the car for 5 years and then me for 5 years and any auto life cycle after 10 years is gravy to me…

  65. vdragonmpc says:

    I like the folks that put 7-8000$ worth of custom stereo equipment, 2 grand worth of rims and other junk on the car… Then they get pissed when they ‘skip’ 4-6 months of payments and their ‘rolling investment’ is gone.

    I used to do a lot of custom stereo/alarm installs and I saw a lot of that go on in the 90’s. Nothing is as sad as a guys car rolling down the street with the alarm howling on a roll back wrecker.

    Of course they call demanding the car’s contents. That never went well.

  66. savdavid says:

    How does paying off your car make you happy? That does not prevent you from taking out a title loan. In fact, it makes it easy! I don’t understand unless you are just saying you are glad your car is paid off. In that case, what does that have to do with this story?

  67. noodleman says:

    When I bought my car, it was actually cheaper to finance than to pay cash


    How can that be? If the cash price is, say, $10,000, how could financing that — even at 1% APR for just one month — be CHEAPER than actually writing a check for $10k?

    Just curious to know how the math works out.

  68. t-r0y says:

    @noodleman: Easy. 0% financing. That’s what I got on my SUV — now paid off! It’s cheaper than paying cash because you can invest the money you’d pay for the car and earn interest.

  69. Tank says:

    @winstonthorne: banks repo cars quickly because they can be painted a different color, hidden in a garage, taken to another state, driven up a tree or into a river, etc. the value declines daily, and they want (need) to recover as much as possible as quickly as possible to mitigate their losses.

  70. Charlotte Rae's Web says:

    @noodleman: my husband was offered a bonus for financing through the finance group the dealer had but it had no early pay penalty after 60 days. So he took the bonus, waited two months and paid it all off. It was less than cash.

    This plan works fine for us:

    Drive your cars 2-3 years longer than you thought you would, buy cars 2-3 years old so they are still under warranty and pay cash for them (unless you can work out a loan/rebate deal where you end up paying less than cash straight out).

    This plan coupled with our 15 year mortgage has really made a huge positive impact on our overall financial goals.