MADISON, Wis. (3/19/09)--As the economy continues to struggle, more credit unions are reporting an increase in vehicle repossessions, as members discover they owe more than the car is worth.
MidFlorida CU, Lakeland, Fla., this week opened MidFlorida Wholesale Auto Sales to sell some of its repossessed vehicles. The credit union had previously run an auto sales service that was opened one day per week, but expanded to five days a week.
The credit union sees about 40 to 50 repossessions per month, up from about 30 to 40 last year, Kevin Jones, MidFlorida CEO told News Now.
Jones said he frequently talks with the credit union's collection manager, and says the cars are repossessed because of divorce, death, or lost jobs.
"Our repo numbers are pretty modest for our asset size," he added. MidFlorida has $1.2 billion in assets.
MidFlorida is not having many problems with delinquent home loans, so it's not seeing as much spillover from the mortgage market's assets on the auto loan side, Jones said.
Colorado's Norbel CU and Public Service CU told The Coloradoan that the number of cars they have taken back has increased this year. Norbel took back 15 cars last year, and had five repossessions in January and February, Norbel CU CEI Ed Bigby told the newspaper (March 16).
Public Service CU, Denver, also has experienced a spike in repossessions. But credit unions are still making loans, which is good news, Public Service CU President/CEO David Maus told the newspaper.
He added that auto dealers may have to close their doors if there weren't credit unions to finance vehicles.
Jim Craft, director of lending, Oregon Community CU, told the Associated Press that the credit union created a car lot recently for repossessed vehicles. Many members have lost their vehicles because of the recession, and many were "great members," he told the AP (March 7).
SELCO CU Director of Lending Jim Mau told the Associated Press that the credit union's auto loan defaults were 0.5%, but the figure increased to 0.72% last year. Though defaults have risen, it's expected with the economy, he said. The credit union still wants to make loans, he added.
The AP also noted a statistic from the American Financial Services Association that says credit unions or other lenders lose about $8,000 on each repossessed vehicle.
According to Trans-Union, the national 60-day auto delinquency rate edged up between the third and fourth quarter of 2008 to 0.86% from 0.80%. However, 14 states experienced a drop in year-to-year rates, compared with a national 8.86% increase.
courtesy of cuna.org