Car takeovers stall, despite sluggish economy
Unemployment claims have skyrocketed during the coronavirus pandemic and many have struggled to meet the monthly rent challenge. But the number of car repossessions reported to the Los Angeles Sheriff’s Department has taken a surprising turn: it has declined.
There were 16,142 repossessions in 2020, a drop of 34% from the 24,462 reported the year before, according to LASD data. The 2020 tally was also the lowest annual figure since 2014, when 16,585 vehicles were picked up.
Los Angeles County Car Repossession by Month, 2018-2020
The decline is in part because, at the start of 2020, foreclosures were on the rise; the totals in January and February were both higher than in the same month in 2019.
The situation was reversed once the widespread business closures took effect. There were 1,454 repossessions reported in March, up from 2,109 in February. The decline was even more pronounced the following month; the 481 retakes in April were almost 74% lower than the 1,844 retakes in April 2019.
The months of May and June also saw repossession figures below half of the total in the same month the previous year.
The reason: Some large financial firms ended the practice early in the coronavirus pandemic. An employee of Repossession RWA Jonathan, who declined to give his last name due to the sensitive nature of the business, said the large credit companies that use his business to take possession of vehicles have simply stopped calling.
“We actually thought they would take over, but the finance companies didn’t want the cars to be repoed and we ended up losing work,” Jonathan said. “A lot of my drivers were sitting at home from March through July.”
A vehicle repossession occurs when someone finances or leases a vehicle, stops making payments, and creditors take back the car without immediate warning, according to the Federal Trade Commission. Once a creditor has possession of the car, they usually resell it.
LASD repossession data provides insight into the economic hardships many people faced even before the pandemic. In addition to losing the primary means of getting to work, school, or the grocery store, a repossession can destroy an individual’s credit, making it more difficult to obtain a loan. future or forces the person who obtains a loan to pay higher interest. rate.
Nisha Kashyap, lawyer with the Consumer Rights and Economic Justice Division of Pro Bono Law Firm Public Counsel, said car repossession was a problem even before the pandemic. She added that some customers who lost their jobs during the pandemic were unable to find work after their cars were taken back, which made the situation even worse.
“The sudden loss of a car can be very damaging,” she said. “In most repossession cases there is no notice given prior to repo, so it can be done without any warning once a consumer has defaulted on a loan.”
LASD deputy spokeswoman Trina Schrader said finance companies would typically contact a towing company to repossess a car, and once the vehicle is removed, the company will call the local sheriff’s station to report the problem. vehicle that was recovered and the address.
“We have pension companies contacting us at the station in this jurisdiction to let us know that they have repossessed the car and let us know that it was not stolen,” she said. . “This is mainly so that we can order a person who calls us to report the theft of their car, so that we can tell them where the car is and give them the contact details of the finance company.”
Although repossessions have declined during the year of the pandemic, they have been on the rise since 2012, with a jump of almost 27% between 2017 and 2019 alone.
Car Repossession in Los Angeles County, 2010-2020
Car repossessions most often occur in low-income communities. In 2020, the districts of Compton, Lancaster, Palmdale and Pico-Rivera had a total of 4,673 repossessions. Meanwhile West Hollywood, Malibu, Palos Verdes and Calabasas had a cumulative total of 131.
This doesn’t mean that people in wealthier areas were always up to date on their car payments. Jonathan said his company rarely receives requests for luxury vehicles such as Porsches because “the rich have garages, and we can’t go there to pick up a car unless it’s a car. public garage ”.
He added that his company most often receives trade-in requests for “everyday cars,” like the Honda and Hyundai Elantras.
Car repossession by district, 2018-2020
Some people who have repossessed their vehicles say they were unable to recover the belongings that had been left in the car. Kashyap said someone who has repossessed a car has the right to reclaim their property, although it may be more difficult if the car has been transported away from the person’s home.
“If you just lost your car, you may not be able to travel deep into the valley, for example, to collect your belongings,” said Kashyap, the consumer rights lawyer. “For people who have documents or medications when they are picked up, it can be very difficult to get them back.”
Jonathan said picking up vehicles was more difficult than before because of TV shows like “Operation Repo”. The reality show, which ended airing on TruTV in 2014 but is still available on reruns, portrayed the world of car trade-ins in the San Fernando Valley.
“The TV shows let people know how the cars are being tracked, which kind of burned them down for us,” he said.
Kashyap said the repossessions were a symptom of a larger loan problem with “extremely high” interest rates and “unaffordable terms”. She pointed out a History of the Wall Street Journal on borrowers falling behind on car payments, an indicator of how uneven the economic recovery from the pandemic is.
“This in itself is a symptom of financial distress,” she said. “The covers are the natural consequence.”
Kashyap said a better way to address these issues is to improve lending practices and access to credit so people aren’t burdened with high-interest loans they can’t afford.
“Transportation is a necessity in Los Angeles,” she said. “How do you access transportation in a fair way that doesn’t result in this cycle that further damages your credit and leaves you stuck in another high interest loan?”
Kashyap added that for people in Los Angeles who use their cars for shelter when communal shelters may not be the safest option, repossessions can have “devastating consequences.”
How we did it: We looked at publicly available and Los Angeles Sheriff’s Department repossession data from January 1, 2010 through December. 31, 2020. For the boundaries of the neighborhoods, we rely on the boundaries defined by the Los Angeles Times. Learn more about our data here.
LASD data only reflects repossessions that are reported to the ministry, not the number that actually occurred. To do our calculations, we rely on the data that LASD makes public. LASD can update previous reports with new information or re-categorize older reports. These revised reports are not always automatically part of the public database.
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