When you surrender a vehicle to the bank, what does it generally cost the bank in terms of fees and expenses to repo and sell the vehicle, and generaly how much of the actual value do they get at the auction?
The actual value they get depends on the condition of the car when they get it back.
If you put 50,000 miles on it in one year, your new puppy chewed the seats to hell, and it was the middle car in a three car rear ender, not much would be the answer.
Also it would depend on how far away the car was when it was popped. I saw a car that met the description above that was popped in Flordia. It cost some serious $ to get it back to LA.
The boss was not happy.
I spent a couple of days lurking on a repo guy message board.
It appears $350 is a “middle of the road” fee. Some guys charge $150, some $500.
So the bank is out that much before they even go to the trouble of handling the legal end of things and go to the effort of selling the vehicle.
In theory it will cost the bank nothing. The original purchaser will pay for all the expenses involved in the repossesion plus the deficency amount.
In theory. Since the car was repossessed for non-payment of the car loan, it seems to me very unlikely that the bank is going to have any greater success getting the purchaser to repay the balance plus the repo costs!
The whole thing usually ends up as being seen as a loss by the bank. Think of it this way: The vehicle itself may be worth, say $20k brand new, and the borrower puts $3k down, and finances $17k at 5% interest. If the borrower had continued to make his payments all the way through maturation of the loan, the bank would have gotten it’s $17k back, plus a tidy sum in interest. The bank has almost zero interest in the collateral as an object of value, since after wear and tear and repo fees, the car is then usually sold at auction for a fee to the auctioneer. They may be able to get $13 or $14k if the car is in decent condition and a desireable model, $9k or $10k if not.
Banks usually lose money on this, that’s why you have to try really hard to get your car repo’d. The banks (and auto company’s) really don’t want your car back.
It’s not just the repo cost as well. By the time it gets to that stage it will have been in their collection department for at least 6 months in most cases. So you also have the paperwork and manhours involved in that, before you even get to the cost of the physical repo.
Good grief, I shouldn’t post while on the phone. That first part should read ‘It’s not just the repo cost that is involved.’ Trains of thought and all that…
So, I know I’m paying $80 per month to insure by home lender against the chance I might default on my home loan before I have 20% equity.
Is there some guy out there paying $15 per month to insure his auto loan originator against him defaulting on payments on his bitching’ Camaro?