The Truth About Cars » title pawn http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Wed, 10 Dec 2014 17:21:42 +0000 en-US hourly 1 http://wordpress.org/?v=4.0.1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars editors@ttac.com editors@ttac.com (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » title pawn http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com Hammer Time: The Black Pawn http://www.thetruthaboutcars.com/2013/01/hammer-time-the-black-pawn/ http://www.thetruthaboutcars.com/2013/01/hammer-time-the-black-pawn/#comments Fri, 25 Jan 2013 14:25:41 +0000 http://www.thetruthaboutcars.com/?p=360227 100 Cars are lined up for next week’s sale. Every single one of them is a repo from a very successful title pawn company… and every one has a story to tell. The histories on many repos really begin with the license plates. Disabled Veteran… Educator… it’s amazing how many cars and trucks were once […]

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100 Cars are lined up for next week’s sale. Every single one of them is a repo from a very successful title pawn company… and every one has a story to tell.

The histories on many repos really begin with the license plates. Disabled Veteran… Educator… it’s amazing how many cars and trucks were once owned by folks who really made a difference in this world.

It doesn’t matter though. After 25 percent monthly interest rates and numerous attempts to get their clients to borrow even more money… their car is now forfeit. And so is their freedom.

The auction will be taking place in Clayton County, Georgia. A community that is an amazing microcosm of black America. The malls are in decline. Jobs are scarce, and big box stores that were once rare to non-existent in the community are now all over the place.

But to get to any of them you need a car. Any vehicle will do. The county has no more public transportation and the tax base continues to be affected by numerous factors.

One of them is the laissez-faire attitude towards companies that prey on the poor and the desperate. A 25 percent monthly interest rate for three months, offered by virtually every title pawn in every corner of this community, can easily compound to a loan that is too difficult to pay for those who are already struggling.

Even if that loan is only based on a 40 percent wholesale Black Book Value for the vehicle (which is typical), a $1000 loan will stay at $1000 only so long as the debtor is able to pay $750 within those first three months.

A loan default usually results in a repossessed car that can be worth many more times the original loan value. Interest payments, repo fees, administrative fees, and the inevitable auction expenses often result in a healthy profit for the title pawn company. They also result in destitution for the borrower. In Georgia you can offer a loan at a rate of over 180 percent a year. 25 percent for each of the first three months and 12.5 percent for every month thereafter… and in perpetuity.

Click here to view the embedded video.

Most states and communities outright ban title pawns due to the corrosive impact such usurious loan rate can have on the community. Wisconsin is the latest state to regulate the interest rate to a still semi-usurious 5 percent a month. That measure took years and a very tough battle with an army of highly paid title pawn lobbyists.

But other Americans (mostly in the South and Midwest) are not nearly that lucky. In some towns the number of title pawns on the main strip can outnumber the fast food joints and closed down mom-and pop businesses. The temptation is always there. Especially if there is no other financial recourse. The impact this has on our economy is far greater than one can imagine.

Any American without a car is very limited in their ability to find employment, and this reality costs money for everyone.

Taxpayers pay for more unemployment benefits and with fewer Americans able to afford a home, uncollected property taxes go up as well.

Editor’s Note:A summary of taxes receivable in Clayton County, Georgia as of June 30, 2011 is as follows:
Tax Year
2010 $ 4,217,758
2009 1,193,407
2008 373,337
2007 129,005
2006 115,869

The government has to provide more welfare services for these citizens. More debt is inevitably issued by all levels of government to pay for it all.

With more debt come interest payments and even less money over the long-term to cover deficits that are now rising dramatically. But there’s an even more depressing and sinister side to it.

That is growth. Folks who were once successful need to be able to build on those once firm foundations, and without a car, that just isn’t going to happen.

 

The handshake and the face-to-face time most small businesses need to get going simply can’t happen when their car is in a repo lot instead of a driveway. Neither can they easily care for their families. It’s a vicious cycle of keeping people in poverty, and in a place like Clayton County, it represents a new American reality.

The question is obviously… What to do? You can ban title pawns outright. With all the debate about free enterprise, it’s interesting to note that certain businesses that are seen as parasitic can actually do a lot of good. It’s estimated that well over 100,000 vehicles will be repossessed by title pawn companies this year.

But hundreds of thousands of Americans will also be able to pay off those loans. Should they be banned? Regulated? Left to the vagaries of the market?

Click here to view the embedded video.

Most states have chosen to ban title pawns, or to regulate them to a degree where the interest rate is far lower than the 187.5 percent annual interest rate currently charged in Georgia. In private conversations with title pawn managers, I have been told that many of these firms can usually enjoy gross profit margins that are well in excess of the amount loaned. This may be one of the reasons why a place like Clayton County is filled with title pawns while the overall employment and home ownership rates continue to decline in economically depressed communities.

Then there is the issue of local favoritism. The local title pawn auction I mentioned earlier was illegally operating in Clayton County for nearly eight months. Over a dozen auctions of approximately 700 vehicles took place with no business license, no permanent office or phone at the location, and no voice recording of the three bids required by state law to liquidate the cars. Ironically enough, it took place in the back of a closed down GM dealership that once had employed hundreds of people over the past decade.

Even after they were warned about their activity byan official the prior year, they continued to liquidate cars, the law be damned. Eventually someone informed the county of the activity and the place was shut down.

After over a dozen illegal sales and that second visit by a county official, something truly unexplainable happened.

They got their business license. It’s amazing that any business with such a long history of illegal activity would be so quickly accommodated. The neighboring City of Morrow, which had been the prior home for that auction before it was discovered, threw them out. In fact, the location of the auction had been moved three times once it came to Clayton County.

So how can anyone justify the issuing of a license in light of this? Would an unlicensed driver or struggling business anywhere be given the same treatment?

There are a lot of responsible citizens throughout our communities who try to provide for their families. In their work, and in their dealings, they pursue an opportunity to build a better life. As Americans celebrate Independence Day, the question that must be considered is whether the poor, tired and huddled masses of generations past would have sacrificed it all had they known that our government would so easily whore itself out to the powers that be?

It is a question worth considering…

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Hammer Time: Repo Pro, Repo No! http://www.thetruthaboutcars.com/2013/01/hammer-time-repo-pro-repo-no/ http://www.thetruthaboutcars.com/2013/01/hammer-time-repo-pro-repo-no/#comments Thu, 24 Jan 2013 16:38:42 +0000 http://www.thetruthaboutcars.com/?p=474975 “Aaahh Steve? My rig caught on fire.” At first I thought about oil rigs in the Gulf of Mexico engulfed in an endless torch of black smoke and molten metal. Then I realized that the repo driver was talking about his own truck. In all my years of dealing with repo companies, I had never […]

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“Aaahh Steve? My rig caught on fire.”

At first I thought about oil rigs in the Gulf of Mexico engulfed in an endless torch of black smoke and molten metal.

Then I realized that the repo driver was talking about his own truck. In all my years of dealing with repo companies, I had never known an auto recovery company, big or small, that was neglectful enough to turn their money maker into an ashen shell.

Before noon I would be awakened by another surprise.

Morning phone rings…

“Steve, I just went up to the guys door and knocked on it. He didn’t answer.”

“What?”

“The guy on Richmond Road.”

My face faded into a whiter shade of pale. “Are you still there?”

“No.”

“Look Frank, this guy’s name may be Mr. Rogers. But he sure as hell ain’t gonna open the door and welcome you to a $30,000 Cadillac. You know those signs that say trespassers will be shot on sight? This guy could have a gun, a dog.”

“He did have a dog in the garage, I guess the car is there too.”

Sigh… I had been suckered into a good presentation at the lot a few weeks back and gave the guy a chance… now the opportunity was all too regrettable. The putz could have been maimed!

“Frank, please do yourself a favor. If a dealer asks you to get a vehicle, it’s usually because they are either too busy or too chickenshit to get it themselves. Don’t worry about getting this one. Let me call you back in a bit.”

A minute later I called up the Godfather. Otherwise known as Dave Monico at Godfather’s Asset Recovery.

“Hey Steve! Whacha got!”

“A big pain in my ass.”

“Still eating at Waffle House?”

“Hell no. I’ve got an 01 Cadillac Deville in a garage. GPS is good.”

“Let’s locate it then.”

I put a GPS in all our more expensive vehicles. You have to these days because if your customer falls in love with the car and loses their job, you may just never get a chance to get it out of that garage unless you can zap it.

“I’m gonna ping the thing every half an hour until I see the guy move. I’ve got two guys in the area so we may be able to get it today.”

A half hour later I got a call back from Dave…

“Do you know anything about S-Class Benzes?”

It just so happened that I did, thanks to the Barnacle Bitch (good click)  I wrote about not too long ago.

“We can’t get this thing opened. You wanna come by?”

“Sure.”

I walk into his new office. It’s in North Georgia so the eatery next door is a BBQ joint instead of a delicatessen, and the cussin’ ain’t as strong since this is the Bible Belt. Everybody there is in front of a computer directing the repo drivers at the cars that are out and about, and running their skips during some of the slower moments.

“Steve, the battery in that Benz repo is dead and all the airbags are down. The little title pawn in Lithia Springs gave $5000 for it.”

“Then they will be lucky to get two.” I spotted the 2002 Mercedes S430 at the impound lot next door. Peeling paint all over. Flat tires. Airbag suspension on the floor.

“You know what, Steve?. I think we’re in the wrong business. I need to repo seven to eight vehicles just to net out that $1250 monthly payment the title pawn company got for this one vehicle. All they needed was someone stupid and desperate to walk in the door.”

“Did they get paid?”

“No. But they may get that Benz… and my beautiful repo and storage fees.”

“Then you’re in the right business. You get the check. They get the junk. The grass is always greener on the other side of the fence until you have to start mowing all that shit down.”

“Am I gonna have to replace all those airbags? I’m thinking about keeping it for myself.”

“Maybe… got the key?”

“No, I just have the fob.”

“Give me the fob.”

Every Mercedes S-class key fob from 10 years ago has a laser key tucked away inside of it. Just push a small button and out it pops.

“Now you have a key. I see you have a new guy out here. Does he like crappy old Benzes?”

“That’s Jeff.”

Handshakes… “Let’s get a jump box Jeff and have ourselves some fun.”

We walk to the impound lot and I thank God that Dave doesn’t keep a dog there. I hate the smell of dog shit and every single impound lot that keeps a canine is riddled with that scent along some unique tinge of mutt musk. Dogs don’t sweat. But they pant, shit and mark their territory quite well.

Yes, I have a dog. An indoor dog. It doesn’t shed.

“Jeff, you know where the battery is?”

“No. Shouldn’t it be under the hood?”

“These Benzes and first generation Priuses have only one thing in common. They keep their batteries in the trunk. Now take that key and see that indent in the center of the trunk where the handle appears to be? Feel the center and you’ll find the perfect place to take that laser key and turn it 90 degrees counter-clockwise. Then push the button up. ”

Jeff tries, fails. Tries again, fails. “Nothing.”

“Let me see.”

I try to do the same thing. Nothing. I check the trunk to see it’s fully closed and immediately realize that the trunk is an aftermarket unit. The paint is all flaked out. The gaps between the panels feel coarse, and the key is struggling to go in all the way.

“Looks like Dave will be visiting the locksmith. There is nothing else to do until then. I’ll check on the fluids since we’re here.”

This Benz has good fluids if nothing else. The coolant is from the dealer. The oil is dirty, but not gritty or tar black. The transmission fluid has a slight burnt smell. But not bad given that this thing came from a title pawn.

I scratch my head, “The title pawn paid out five grand for this thing?”

“That’s what Dave told me.”

“Is Dave charging them for storage?”

“$15 a day.”

“Tell Dave to find out when the Benz is going to be charged off. When it gets close to that day, he should call  them and offer $2000 with no storage or repo fees. Let them know that the trunk can’t be opened and the car won’t start without it because the battery is tucked in there. Also have them know that all the airbags on the suspension are down and all four tires need to be replaced. They will counter at $2500 to $3000 at most.”

Most title pawns know as much about cars as my young friend Jeff knows about Sandy Koufax. Title pawns are far more interested in how well their customers pay on a $500 loan at 25% monthly interest than they ever will be about the mechanical quality of the vehicle that gets the title lien.

The $10 an hour service rep will almost always go outside. Listen to the vehicle. Make sure it doesn’t sound like a bucket of bolts, and then try to figure out the customer.

Title pawns are in the paper business, not the car business. As a consequence the smart ones will either bring their vehicles to a large auto auction with plenty of low end buyers, or partner with an outfit that retails vehicles.

The dumb ones rely on the dealer down the street and the recovery agents.

“Jeff if you ever want to own a Mercedes, a Land Rover and a Lexus, become very good friends with a nearby title pawn.”

That was not a tall tale. One recovery agent I knew who recently devolved into the world of meth had at one time owned an LS400, a Discovery, and a late-90’s S-Class. All were less than 10 years old and all of them cost him less than $5000 altogether. The only thing he had to do was become the new best friend of an ex-military lady whose main job was to lend money.

Cars were only a 3% footnote in her store’s quarterly figures. She could really have cared less about those cars…. which is what Dave is now hoping for with this Merc.

“Hey Steve. Wanna watch some Pac-Man? Looks like your guy is on the move. What do you think of the Merc?”

“Jeff will tell you. I gotta take off. Just give me a call if you pick it up and I’ll meet your driver at the auto repair shop with the check.”

“Sounds like a plan…”

It was a plan. But not the only one.

(to be continued)

 

 

 

 

 

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Hammer Time Remix: Behind The Gavel http://www.thetruthaboutcars.com/2012/10/hammer-time-remix-behind-the-gavel/ http://www.thetruthaboutcars.com/2012/10/hammer-time-remix-behind-the-gavel/#comments Sun, 14 Oct 2012 16:23:42 +0000 http://www.thetruthaboutcars.com/?p=463646 Six hours to showtime. We have 58 vehicles and 1 motorcycle for today’s sale. It will be a very interesting day between the first dealer conversation and the last car that rolls (or gets pushed) through the lane. We’re going to be managing an on site sale for a large financial institution that is most […]

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Six hours to showtime.

We have 58 vehicles and 1 motorcycle for today’s sale. It will be a very interesting day between the first dealer conversation and the last car that rolls (or gets pushed) through the lane. We’re going to be managing an on site sale for a large financial institution that is most definitely not in the car business.

Their business is the money business. They will demand 59 checks in hand within 24 hours, and these vehicles must help keep their books healthy for the end of year bonuses.

As for us… we have the bank’s managers, a long line of new and returning dealers, flat tires, dead batteries, cars with varying sorts of mysterious starting problems, and a thunderstorm set to hit in an hour. The cars? Everything from a ragged out 2008 Chrysler 300 to a pristine Mommy-van van whose only owner had the misfortune of dying back in September. The cars are here… now we just need to build the market and have a great sale.

One of the fortunes I have is my dealer work. As a dealer, I get on a lot of mailing lists from other sales and when I do, I get to constantly build my market. In an entirely legal way of course. This weekend yielded some very good results.

By Monday morning we have already sent off a list of vehicles to our dealers that now include several dozen new names. Within hours we have new dealers who are ringing our line to become registered with our sale. It looks to be a great day which isn’t surprising. Given that we’re on the cusp of tax season where folks put their returns towards down payments on their new rides, today’s sale will more than likely be especially strong.

Most auctions have one lot manager who is in charge of a given number of vehicles. They will battery jump the vehicles, add fuel, pump tires, change batteries, and will even shoot some starter fluid to awaken a long slumbering jalopy or ten. We have two lot managers for our sale. Why? It’s cheap insurance and all of these cars have been sitting for a while.

When you’re dealing with a lot of older repossessed inventory that has been laying about, you simply need extra hands to prepare for the unexpected. Even if one vehicle doesn’t go through, that ‘no-sale’ will translate into two lost fees. A buyer’s fee and a seller’s fee. Needless to say, we’re always amply staffed.

I love cars. But like the bank, I want the metal to go away. The long and the short of it is that our job as auctioneers is to take care of the “patient” after the patient’s dead. Most of these cars have lived rough lives and when you open the door to these cars, you get a very complete picture of most of their owners.

Some were single moms whose debts and economic misfortunes simply caught up with them. Others were big spenders who were willing to pay big money for rims, audio systems, and TV’s. A couple were perverts. A few were gangsta wannabes, drug addicts, or simply had more money than sense. A surprising number are laid off teachers and government employees.

In 2007 very few repos on average came from responsible owners. By 2009, the title histories and well kept metal told a very different story.

Looking at the titles for these vehicles, virtually all the rough ones are bought and repo’d within a year’s time. Low savings and a quick dose of unemployment will do that to those paying 12.5% interest a month on a title loan. The ones that had long periods of ownership really break my heart. Folks that kept their cars well kept for ten, even fifteen years, can find themselves behind the eight ball of a terrible economy.

Medical expenses bring down a lot of these people. You can often see the unpaid hospital bills, pills, and test results that put them in the American poorhouse. Many of the dealers are also dealing with the effects of these situations. Situations like these, and my own distaste for financing, are what kept me a strictly ‘cash’ dealer for the well to do until October of 2008.

Anyhow, we’ve prepared well for the sale and the dealer interest has turned into a swarm. Cars are being started up. Wholesalers are calling their used car sales managers. Retail car dealers are checking to see what cars are worthy of their clientele.

The first vehicle sells strong. A 2008 Chrysler 300 goes for $2700 above the reserve and the rest becomes the automotive version of a bull market.

Other than a tampered 1998 BMW 5-Series… that still sells at a healthy premium, fifty eight cars come and go through the auction block within a matter of thirty-five minutes. By the time the 7th Ford Taurus roles through, we’ve managed to sell all but two vehicles. Only a Mazda that the bank was buried in and a Honda crotch rocket that was smashed by it’s owner pre-repo, keeps the sale from being a clean sweep.

We shake hands. Enjoy a few conversations. Take care of a lot of checks and titles, and close shop. The sale is over before 4:30 and by 5:30 we’re on the road. We’ll be coming back to do it all over again in two weeks.

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