We never learn - Auto Junk Loans

prc117f said:
These loans though are different In one way, they can keep repossessing the cars and keep reselling them for insane rates.

So if a car the dealer paid 8000 dollars for is repossessed 10 times, but the average schmuck paid 1,500 dollars into the loan. They still profit.
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Until you run out of idiots. You always run out of idiots eventually.
 
m1nt said:
what do you do about repo-ed cars with mechanical problems and the depreciation? I could see lots of cars coming back with blown gaskets, no oil change in 20k miles, etc. or just sitting on a repo lot depreciating while waiting to be resold. are these serious issues that cut significantly into profits? just curious.
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It may have changed but the way we did it: check the value of the car vs the damages. typically anything that needed repairs greater than $1500 would be sold to copart
 
"Until you run out of idiots. You always run out of idiots eventually."

I too thought there there had to be an peak idiot scenario, then I started reading ET.:D
 
prc117f said:
The used subprime auto market is so lucrative for dealers it's not funny, used autos are highly liquid. And lots of these shops have a mechanic that does repair for set prices etc..

They don't care if the buyer only makes 3 payments. And with the new gps and remote repo systems it really dropped the cost of tracing. Shops will just trace and recover.
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Sounds like a new niche market - detracer. Remove the various tracking gadgets installed in cars. And phones. And whatever else.

One difference between subprime morts and subprime autos is that the models do not expect the price of the asset to increase. While this does not mean there is no bubble, it does suggest any collapse will not be nearly as catastrophic unless demand for used cars just dropped to nearly zilch.
 
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