The Washington PostGetty Images
- Experts who pay attention to auto loans see trouble on the horizon and think repo men and women will be busy in the new year.
- Coronavirus era federal stimulus payments and unemployment benefits are mostly finished, and there’s no hint that we’ll get another aid package before January 20.
- If you think you might be facing repossession, the FTC has some advice on how to contact your lender as well as other suggestions, principally: Don’t do nothing.
While everyone has felt the impacts of the coronavirus in some way, one group of people might be about to get hit with another bout of bad news. With coronavirus-related business and school shutdowns on the rise alongside an increase in cases and deaths, more people will lose their jobs or will in some way suffer economic hardship. And that will mean missed debt payments, which translates to a surge in auto repossessions.
That’s the prediction from John Van Alst of the National Consumer Law Center, who spoke with KING-TV in Seattle about the financial impact of the coronavirus. “We’ve certainly seen an uptick in defaults and delinquencies,” he said. “I think that’s going to translate into a really large increase in repossessions.”
The American Recovery Association’s Les McCook echoed that point: “I’m almost certain the number of repossessions are going to increase,” McCook said. “I’ve been in this for 50 years, and never has there been a time like this.” The experts KING-TV spoke with think repossessions are likely to climb in 2021, but they aren’t sure how bad the increase will be or when the numbers will start to rise.
Part of the problem moving forward is that government responses to the COVID-19 pandemic are easing up or have already finished. Some states issued temporary repossession halts, but not all of them. A $1200 stimulus check was mailed out to most Americans earlier this year and unemployment benefits were increased, but these programs are mostly finished now, and additional federal stimulus is unlikely to happen until after President Biden is sworn in in January. This means anyone who was paying their auto loans with these stimulus funds is now in a situation where they need to find other solutions.
Talk to the Lender
In April, the Federal Trade Commission suggested people with financial difficulties due to COVID-19 contact their lender, make sure they know their rights, and perhaps refinance their loans. Most important, the FTC said, “Don’t do nothing . . . While many lenders have begun to voluntarily forgo repossessions during the pandemic, if you get behind on your payments, your lender still could repossess your car—sometimes without warning.” The FTC also pointed out that even if your car is repossessed, you may still owe money on it.
It’s challenging to be on the other end of the repo business during a pandemic, too. The American Recovery Association is made up of more than 260 professional repossession agents, and it serves as a central resource for repo men and women as they do their jobs. The ARA says the extra sanitizing work and personal protective equipment to protect repo men and women from the virus adds at least $20.53 to the cost of a repossession, not counting one-time costs like plexiglass barriers, signage, or thermometers. To make up for these extra costs, the ARA suggests “a service fee of no less than $50 be levied on each repossession in order to defray the increased cost of doing business, until such time as restrictions are lifted and COVID-19 is no longer deemed a threat.” So there’s that.
For people who may be facing a vehicle repossession, the FTC has a page of advice. One of the most important suggestions, in addition to getting in touch with your lender: contact your state attorney general and/or your local consumer protection agency to understand the law and your rights where you live.
This content is imported from {embed-name}. You may be able to find the same content in another format, or you may be able to find more information, at their web site.
This content is created and maintained by a third party, and imported onto this page to help users provide their email addresses. You may be able to find more information about this and similar content at piano.io