As lenders increasingly enter the subprime space, the volume of repossessions is expected to spike from current lows, according to Patrick Altes, an asset recovery specialist at Time Finance Adjusters.
“The assignment volume will explode in the next year or so,” Altes predicted during a recent webinar organized by RepoPulse. “Auto loan delinquencies are at the lowest they have been in the past 10 years and it [has] encouraged more and more lenders to enter the field of indirect lending.”
The perception is that the auto finance space is profitable and relatively risk-free, Altes said.
“It’s a perfect storm brewing: the mood of the buying public is pretty strong, but there are so many players, making the bar lower for people to get these loans,” he said. “The average term of a loan in the subprime market is like 71 months now, so the consumer is going to be eternally upside-down in his car.”
Meanwhile, Les McCook, executive director of the American Recovery Association, said during the webinar that it would probably be more cost-effective for regulators like the Consumer Financial Protection Bureau to look at aggregators in the asset recovery space, rather than look at smaller players one at a time.
In CFPB industry guidance, the bureau has warned it would hold lenders responsible for the actions of their service providers.