Financed Cars are being repossessed in record numbers due to loan defaults, especially in America as indicated by figures recently revealed by the Finance & Loan industry.To quote NPR's website (National Public Radio), "Auto loan delinquency in the United States hit a 17-year high in the fourth quarter of 2007, according to the American Bankers Association. About 3 percent of car loans were overdue by more than a month.
Some industry analysts estimate almost a quarter of those who financed their car purchase are 'upside down' in their Auto loans. Basically that is saying that their car is worth less than the loan balance.
But why is this happening.? The popular belief is that quite a few people are purchasing more expensive and higher featured autos. This is something younger buyers are doing which means they often just have the minimum deposit. This exposes them to long term high interest loans. Add higher running costs and we get a volatile situation where repayments on the loan fast become unaffordable and quickly get out of hand.
Income growth has been reasonably flat over the past 10 years with most costs rising. Dealers are encouraged to get as many new cars off the lots as possible, as well as add on extras that inflate the final purchase price but keep payments at the initial level by extending the loan term.
A comment on the "Wired Blog Network" said: "it's clear that Americans have been buying more car than they can afford. And as with the housing bust, many people have been victims of predatory lending." Another factor is that real wage growth in America has been stagnant for nearly a decade while the price of automobiles continues to climb, especially in the ways that you can add many thousands of dollars in options to your typical ride. The lending arms of car manufacturers are struggling to get people into new cars by extending the terms of the loan. The average today is nearly 64 months."
Car manufacturers have been happily promoting these practices and now it looks like it's coming back to bite them in a marked slow down of new car sales.. .!
The Finance houses are becoming desperate to get some of their money back and get rid of all these Autos coming back from the repo agents. This means more stock at the auctions and even more auctions to try and clear the vast amount of vehicles.. If this doesn't seem like a golden opportunity for someone who needs to buy a car to grab a great deal, then I don't know what does..!!
It is tough on those who got themselves "sold into" something that really was outside their means in the first place, but the people who work at the finance and auction houses have jobs too; they need people to be buying these reposessed Autos... so why shouldn't it be you..???
Go check out our links under "Research Toolkit" and get your auction lists and locations...
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Happy Motoring
The Auto Auctions Guy
