The Expert Podcast

Auto loans are being repossessed and charged off at a very high rate. However, between the two, the highest percentage is a charge-off without repossession. Many times, a bank will do a write-off or a charge-off if you’re 90 or 120 days delinquent. They call that a non-performing asset, meaning that the loan they have on their books as an asset, which was worth something, is suddenly worth nothing to the bank because they’re not getting any payments. So, they have to write it off. The bank is not really in the business of repossessing vehicles.

Sometimes, they will use a repossession as a way to try to recoup some of their losses. However, in recent years, banks have found that repossession doesn’t really get them that much money. What happens is the vehicles they repossess very frequently are in poor condition, and they don’t know that in advance. Your car might be just fine and in perfect condition, but the vast majority of vehicles that are non-performing loans or delinquent — not paid for three, six, or eight months — often have something wrong with them. The car could have been in a crash, or the engine or transmission may have blown. Maybe it was sold to someone out of state.

Banks also have to spend about $3,000 per repossession to get the car back. That’s throwing good money after bad. For example, if every third or fourth car is good and three cars are bad, to get one good car, they might end up spending $10,000 in repossession fees. It’s not worth it. Banks don’t want cars; they want money.

We get calls all the time, every single day, from people who say, “I stopped paying my car loan, and I called the bank to come get it, but they don’t want to.” Or, “I stopped paying it off, and they didn’t try to come get it.” Banks are not repossessing cars because they know that the chances are if they repossess, they’ll spend another $3,000 out of pocket to get it.

Here’s why: it costs them about $1,000 to pay the repo person or company to get the car. Then, it costs another $1,000 to ship it to wherever it needs to go — usually to an auction or holding yard. After that, they have to pay auction fees, storage fees, brokerage fees, and commissions to get that car sold. That’s all money the bank has to pay out of their pocket for a bad car. So, if you stop paying, it’s very likely they won’t come to get your car.

Now, the lien will still show on your title until you do a lien release. The way to do a lien release is to put together a package of paperwork requesting that the lienholder remove it from the title because they did a charge-off. This isn’t something that is widely known. The lienholder can just ignore it; however, in most cases, if a low-level clerk sees the charge-off in their system, they’ll sign the release and send it back to you. So, always request a lien release. You have a 0% chance of getting a lien release if you don’t ask. But, if you do the paperwork, you have a decent chance of success.

If you send a lien release request to the lienholder and they don’t respond, you may be eligible for a court-ordered title. Our website describes the process in detail. We now also offer consultations. If you’d like to discuss this further, more than you can get from watching a video or reading online, you can arrange a private consultation with a certified title agent to discuss your lien situation in depth.

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