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Car loan deliquencies on the rise
March 2. 2008
There aren't enough hours in a day for Jim Coppo to do his job.
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A few years ago, Coppo was repossessing two or three cars on an average day. Today, he tows away eight or nine, and would do more if he had time.
As many Americans struggle with mountainous debt and the threat of losing their homes to foreclosure, others are losing their vehicles at the highest rate in a decade.
"We've been watching this over the past several years, and auto loan delinquencies have been steadily getting higher," said Keith Leggett, a senior economist with the American Bankers Association.
Coppo, whose territory covers Cheshire County, said he's noticed not only an increase in business but a change in the types of vehicles he repossesses. Instead of the Dodge Neon in the parking lot of an apartment complex, he now finds himself towing BMWs, Jaguars, Land Rovers and expensive trucks from middle- and upper-middle class homes.
"I've had to deal with friends. It's the same with every situation. You feel bad as it is," he said. "I just treat every single repo with the utmost respect. Somebody's in a bad spot. It's not necessarily their fault."
Gerald Neiman, a Keene bankruptcy lawyer, said car owners are considered in default of their loans if they miss a single payment, but banks or financiers rarely will repossess before exhausting other options. Indirect or subprime loans through dealerships or other third parties have become more common than direct bank loans. According to the American Bankers Association, direct auto loan delinquencies dropped a bit in the third quarter of 2007 to 1.81 percent but delinquencies for indirect loans rose slightly to 2.86 percent.
Borrowers often are left to make a decision between missing another mortgage payment and losing their home, or dropping a car payment and having no transportation.
"this is just a time when people are getting squeezed," Neiman said. "People try to prioritize the best they can. Housing and feeding the family is certainly top priority. Cars can slip down the list of priorities."
A few missed payments doesn't always mean a car will be seized, said Carol Kaplan, spokeswoman for the American Banking Association.
"You're best off to contact the lender immediately after you see yourself running into trouble," she said. "Sometimes you can work out a payment plan and avoid repossession."
By KEENE, N.H., Boston.com
Information from: The Keene Sentinel, http://www.keenesentinel.com
Source: http://www.boston.com/news/local/new_hampshire/
articles/2008/03/02/car_loan_deliquencies_on_the_rise/
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