Repo Blues

Rick and his wife were so proud when their daughter, Ellen, graduated from high school. They had planned for that day for years. Along the way, they saved not only for her college tuition but they also saved enough to buy her a car without having to take a loan for it. They made a great deal on the purchase, but about 3 months after purchase, they had the car back home so Rick could put new brakes on the car.

Imagine Rick's anger then when he looked out the front window the night after the car was back to find a tow truck backing up to the car. He couldn't imagine what was going on, but he was mad. He ran out and started yelling when he realized the tow truck belonged to a repossession company. He had paid cash! They had no right!

Except they did. Turns out the repossessor had a copy of a title in Ellen's name. Turns out Ellen ran down to the DMV in the town where she went to school, saying she had lost her title, so the DMV gave her one – in her name, not Rick's, who held the original title. Ellen then ran down to a title loan company, took out a $1000 loan and never paid a dime.

Meet the Repo Man. I had an opportunity this past week to sit down and talk with Ron, a great guy who lives in the Atlanta area, where the repossession business is booming. Each month, the Atlanta area averages 10,000 repossessions, which is pretty average across the country. And as the economy across the country continues to cool, those numbers will only grow larger.

What's the cause? One only has to look at the number of ads all over the place for title loans, second mortgages, credit cards, etc. to see the first reason – too many people being granted credit who don't qualify for regular loans, so they have to go to the sub-loan markets, with all the dangers of ultra-high interest rates and unconscionable terms. Buy-here-pay-here sleazy car lots disguising themselves as major auto dealers. More and more people forgetting the meaning of living within their means. All this leads to Ron and his fellow repossessors across the country being very, very busy.

What about Texas? The repossession business is hopping here too. This multi-billion dollar industry is used by every lender. There are over 5000 companies, still a very small number, across the country, most working out of their homes or small offices. It is one of the most thriving sectors of home-based entrepreneurs.

Why would a good person go into such a business, though? Isn't it a bit sleazy? Absolutely not! Hollywood loves to paint this picture of repo guys being nasty, aggressive and mean but really, nothing could be further from the truth. The ones that are nasty, aggressive and mean are the people whose vehicles are being repossessed, who don't pay their obligations, don't take care of their personal business. Besides, repo companies are just filling a need caused by both the lenders, for lending to those unqualified, and the purchasing public, for assuming they could get something for nothing.

So what's in it for the repo guy? There's more business than companies to fill the need nationwide. An average repo takes anywhere from 15 minutes to half an hour (obviously, some take longer, some shorter) and the company charges anywhere from $150 to $250 plus a driving fee. Advertising and overhead is small, with word-of-mouth being the most common means of getting your name out there.

What can you do now to avoid having the repo man come looking for your vehicle? What suggestions does Ron have for us, as an industry insider, if we fall on bad financial times? We'll answer those questions tomorrow.