ARS founder speaks out on repossession fees

“Now they literally have to go on strike to get paid a fair amount?”

GUEST EDITORIAL

I started in the repo industry when I was hired by Chrysler Credit in 1982. I was a Field Rep whose job was to audit car dealerships, collect payments in the field and repossess cars. When we hired a “Pro” we paid $275 a repo, close fees were $75, and they did not have to pay software companies just to get an assignment. That was 40 years ago.

I’m shocked repossessors still get paid about the same, and less when factoring in they can no longer make personal property or vehicle storage fees, close fees are gone, and many pay thousands just to receive assignments, with a much lower repo success %. The ability to skip trace is limited at best, they can’t make contact, and it costs them 4-5x more for Tow Trucks, Gas, Rent, and Insurance. On top of that, the Compliance and Security requirements that didn’t exist are now extremely difficult and expensive for a small business to maintain, especially when the repo fee they receive has not been adjusted to a fair amount in 40 years.

Between 1987 and 1999 I started up, owned and managed 6 independent repo companies in Calif, as well as the first nationwide skip company and the first forwarding company. I understand the model. Repossession is extremely difficult, and it’s a valuable, honorable and dangerous job that ALL AUTO LENDERS need.

Forwarders serve a valuable purpose for lenders as they help manage the process. They deserve a fair fee for the work they do. When we created ARS in 1994 because George Nisbet at a new start up finance company called VW Credit asked Skipbusters to manage all their nationwide Repos because their nationwide footprint was expanding, we added $75 to the repo fee we paid at the time in the early 90s of $275 and started ARS. Skip & Forwarding is a volume business and it shouldnt negatively impact the fees paid to repossessors. Lenders should insure a fair fee is paid for both services. Unfortunately, the current price of a repossession by a repo company is about half of what it should be, forcing corners to be cut.

When we created our skip and forwarding companies, we had no idea this would become the dominant model for skip and repossession assignments, and we definitely didn’t think that decades later the total fees paid to repo companies would be less than when we started these companies.

Now they literally have to go on strike to get paid a fair amount?

I encourage the lending community to collaborate and look into this. Record profits are great for the finance industry, but the Pandemic has been hard on your repo vendors, and the stagnant price model is literally killing the repo industry. We all know the current low delinquency and losses are not sustainable, and we’ve gone longer than any time in history between recessions. When repossession volume increases, the lending industry needs the repossession industry to be strong and ready. These people risk their lives every day as true front line workers, pandemic or not. They need your help, please.

John Lewis –