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What is repo

what is repo


By Ralph Thomas

Originally Appeared As A Business Opportunity Syndicated Article

The auto repossession business is a hidden market type of business which the general public knows little about. When we investigated this business we found a very healthy market from banks and loan companies who do not wish to repossess vehicles themselves. It is a billion dollar industry that every bank or loan company will use and most loan companies and banks us them quite often. There are some 5000 firms in the United States who are in the business working out of their homes and small offices. The great majority of them do no advertising and are not even listed in the yellow pages of the telephone book. There is no need. They simply contact every bank, auto dealership and loan agency in their area to obtain the work. There are three basic reasons why this business is such a money maker:

1) The volume of assignments from companies are relatively easy to obtain.

2) The fees charged compared to the amount of time it takes to perform the repossession is very high. A repossession can take anywhere from fifteen minutes to half an hour. However, the fees charged for such a service is between 150 to 250 dollars.

3) Once a client uses your service once, he will use you again and again. Some companies have as many as two or three dozen of such assignments to give out every month. Often times, three or four clients can give you more work than you can do.

In order for you to understand how this business works and how assignments are obtained, it is important to understand the hows and why of repo assignment to an independent agency. First, there are several different markets. They are:


Most banks in the United States today do a great deal of business in auto financing. When loans are past due they usually go to the bank collection department. The people who work in this department sit at desks and make telephone calls all day long to people who are past due with their car payments. When problems occur, the account is given to the collection manager who makes a determination on what to do. In a great deal of these cases, the collection manager determines that the best solution is to repossess the car. Depending on how easy he thinks this will be, he might either have one of his collection agents repo the car or call in an outside repo agency. Some banks rely solely on outside agencies to do this kind of work. Other collection departments will attempt to repo a certain percentage of the easy ones and turn the rest over to a professional repo agency. Even a percentage of these usually end up in the hands of an outside repo man.


These loan companies work much like the banks do. However, they usually charge a higher interest than most banks and deal with a higher percentage of loans gone bad.


Thousands of used car lots can be found throughout America that do their own financing. They are usually dealing with people who can not otherwise obtain credit. The way a great deal of these operators make money is to charge the buyer a down payment equal to the what they paid for the car and finance the rest. Payments are usually made weekly by the buyer. A large percentage of loans go bad. The used car lot owner makes money by repoing the car, putting it back on his lot and selling it a second and third time. These used car lots have a great deal of repossessions but usually want a cut rate price.


People outside of this business would think that a new car dealership would not have that much of a problem with repos. However, they do have some. It generally occurs when something is found to be wrong with the loan papers and the banks or loan companies throw the liability back onto the dealership. This is called recourse. Another thing that happens is someone comes in and puts a down payment on the car. The check is written to the car dealership and the check bounces. Although new car dealerships do not have as many repos as loan companies, banks and buy-here-pay here car lots, they do have their share.


There are independents and chains. When car rentals don't come back in, these agencies have big problems. They will need to jump on these cases right away. Most of the time, this will require a full scale location investigation in order to locate the renter.


Every once in a while, a private citizen will sell off one of their autos and be paid with a bum check. Their only recourse is to call in a repo man. However, this type of market is usually only targeted by established repo agencies who have been in business several years and list their services in the telephone book. There are other specialized markets in this business such as semi-truck rentals, semi-truck loans, motor boats, house boats, airplanes, and motorcycles. Usually airplanes and semi-truck repos go for about twice the normal charges.

REPO FEES Repo fees seem to vary greatly within the United States and vary greatly from one type of market to another. The standard rate for a repo from a bank or loan company is about $200.00. The standard fee for a used car agency is about $100.00. The repo agency usually has a break down in the charges which might look something like this:
  • DRIVER FEE: $45.00
  • SKIP TRACE: 4 hours @ 25.00 per hour $100.00
  • INSURANCE: $15.00 But the basic repo fee is 150 dollars plus another 45 dollars for a driver fee. When a repo man picks up a car, he usually has to have someone drive him to the location. That is what this fee is for. He will also be required to produce an inventory and condition report. Some agencies also take a snapshot of the car which is included in the inventory and condition report. A great deal of repo cases require the repo man to first locate the subject although this is not always the case. Usually when you locate the subject, you have also located his car. The above total bill comes to $325.00 and repo specialists report they can do several of these assignments per day. A great deal of the problems in auto repossession occur in the location of the debtor. There is a prospective technique employed by auto repossessors that is often referred to as backwards tracing. What the repo man does is look for vehicles with out of state or out of county tags on them. When he spots one he jots down the location of the car and the tag number. With the tag number he obtains a vehicle registration from state motor vehicle and does a title trace. What this tells him is, if the vehicle has a lien on it. If it does, it will give the name of the lending company. The lending company is then contacted to see if the vehicle is missing and needs to be repossessed. Many repo men report that they can obtain assignment to a repossession on three out of every twenty leads they perform a title trace on.

    PERFORMING THE REPOSSESSION It should be pointed out that almost all state laws require that a repossession be done in a peaceful manner. Since most people get very upset when they see a repo man repossessing their vehicle, most repossessions are completed in the middle of the night or while the debtor is working without the owner's knowledge. It's really a legal steal. This gets around the "peaceful manner" state laws. The old term "possession is nine tenths of the law" applies in auto repossession. Normally, the repossession is not complete until the vehicle is off of the debtor's property. It is usually unlawful to enter a closed garage in order to complete the repossession. In such a case, the repo man usually waits until the subject is at work or he'll follow him to the grocery store or something. That way, the repossession can be completed in an easy manner. Before the repossessor attempts to repo the vehicle, he must first make very sure he is repoing the right car. He will match the VIN number he obtains from his client to the VIN number on the vehicle. The VIN number is usually located on the dashboard on the driver's side. The repossession agent has a number of methods in which a vehicle is removed or taken into possession.


    Just about every vehicle that has been sold in the last five or six years has a key code. Key codes can usually be obtained from the title slip. A copy of the key code is usually kept on file at the car dealership. In more recent times, it has become the practice of many banks to obtain the key codes for each loan file and they will have a record of it. Some banks even go as far as having a set of keys cut and kept with the file. A key code is simply a code number used to cut the keys. The repossessor either does this himself with a key cutting machine or has a locksmith do it for him. Although many

    repo men have become auto locksmiths themselves, this is really not a requirement. The majority of repo men simply have an account with a local locksmith who does his work for him. With the key codes, the repo man simply has a set of keys cut and uses them to complete the repossession. However, sometimes key codes are not available and other times the debtor has had his locks changed so the key codes will not work.


    Many repo men use towing as a means of repossession. Many start out making a deal with a local towing company who will give them a discount price. Later, the repo man can purchase a used tow truck if he likes this method.


    You can purchase a small metal rod called a slimjim that is used to place down the door which catches the lock part that pulls up the door lock so you can open the car door. Another method is the coat hanger method. People do not know this but glass will bend somewhat. Once inside the vehicle, the repo man uses several different methods to start the vehicle if he does not have the key. The old key housings that are located in the dash simply unscrew. Once unscrewed, all one has to do is place a screwdriver into the housing and turn. On newer models, the lock housing is on the steering column. In such a case, the repo man either pickes the lock or uses what is called a dent puller. A dent puller is a large round rod that has a sliding hammer on it. On one side is a screw type bolt that can be screwed down into the lock housing. Once in place, the lock housing can be, "hammered" or "slammed out". This item is used by auto body shops to pull out dents. Another method is a lock lifter. This is a screw type piece of equipment that goes over the lock housing. It forces tension on the lock until the housing is lifted out. Once out, the repo man simply starts the vehicle by placing a screwdriver down into the now open housing.

    GO TO.


    GO TO:

    REVIEWS OF LOCKPICKING BOOKS TO OPEN CARS Once the repo man has possession of the vehicle he needs to do several things:


    This is for the safety of the repossessor and is sometimes required by law. Often times, when the debtor finds his vehicle gone he will call the police and report the vehicle stolen. If the repossessor does not report the repossession to the police, then he will be stopped by the police as they will believe that the vehicle has been stolen. By notifying the police, you are also providing a notice to the debtor as the police will usually notify him or her that the vehicle has been repossessed.


    An inventory and condition report must be made on the vehicle as soon after the repossession as possible. You will find a form for this under the forms section of this investigation. At the time of the repossession, the repossession agency obtains from the client a written authorization to repossess and what is called a hold harmless agreement. This protects the repossessor from any litigation that can result from the repossession. You will find a sample of a blanket hold harmless agreement at the end of this report.


    Massive exposure is needed although you will find as few as six or seven clients are about all you need to get this business rolling. You can design sales flyers to send out to every bank, loan company, used car lot and new car dealership. Look in the yellow pages of your telephone book for leads. You will also want to call each one of these businesses and consider visiting them in person. Before long, you will have your first assignment. However, before you start we warn you to read and study this manual completely. We also advise you to contact your attorney and you will need to contact either your Secretary of State's Office or Attorney General's Office to find out if you need a license.


    First, you will want to see if you can compile or otherwise obtain a mailing list of all bank collection departments, used car and new car dealerships, car rental agencies, and loan companies in your area. You will want to spend some time on the development of your sales material. Come up with a nice brochure that is printed on good paper. List your services, address and telephone number. You can mail out the flyers yourself. If the mailing is large enough you might try contacting a mailing house who can sort your mail so you can send out bulk rate. This could save you about half the postage costs.


    Call every prospective source listed in the yellow pages of the telephone book. Make sure you speak with the person in charge. In a bank you will want to contact the collections manager. In a small loan company will be the office manager. In a used car dealership it will often be the owner. In a new car dealership, it don't bother the dealer unless it is a very small dealership. You will want to speak with the loan manager, business manager or general manager. At times you might want to contact the new car sales manager and the used car sales manager. These people might be responsible for such tasks in a large dealership. You can use the telephone to make in person appointments and as follow-ups on the brochure you sent out in the mail.


    When you contact prospective clients in person, always leave your business card and your brochure. You will want to dress neatly and professionally. It is important to look your best as first impressions last a long time. Promotional techniques are something you can use to get your business going. Remember that this is a repeat type client business. Once a client uses your repossession service once, he will likely use your service again. Although many accounts will be small, you will run into accounts that can give you several assignments per week. You might consider offering to do one repossession for free or one at half price just to get the prospect to use your service. It will also be important for you to study your local market. You want to find out what the basic fees are in your area. The simplest way for you do do this is to call up existing repo agencies and ask them. This will help you establish your own price structure. It would help if you had a basic knowledge of how to locate missing persons. We recommend that you obtain a copy of the following manual in use by thousands of locators:

    GO TO: TRAINING ON LOCATING MISSING PERSONS AND SKIP TRACING LICENSE REQUIREMENTS Some states require that you obtain an auto repossession license before you engage in such work. Repo people are closely related to the private investigation business and many states license such operations under this type of law. In Texas, no repossession license is required. In Florida, there are two types of licenses you will need. Other states may or may not require you to obtain a license. In order to find out, you will need to contact your state's Secretary Of State Office or your Attorney General's office.

    GO TO: LIST OF STATE LICENSING AUTHORITIES IF YOU ARE IN FLORIDA, CHECK HERE FOR LICENSING INFO Several hundred dollars per assignment can add up fast for one nights work! However, repossession is not what you would call "light" work. It is not at all uncommon for people to get very mad if you are caught in the act. You could be mistaken for a car thief by either the debtor or the police. In many cases the debtor has been known to chase after the repossessor with clubs, knives and guns. It is dangerous work. Auto repossession can be very rewarding and turn into a high paying specialization. Based on the number of assignments you can obtain and the amount of time required to complete them, this can be a very profitable business opportunity for those with the guts to do it.

    FORWARDING ASSIGNMENTS Sometimes the repossessor locates the subject of a repossession in a distant area. In such a case he will contact a local repossession agency in that area and split the fee. The associations below publish directories for this purpose. These directories are also sent to banks, car rental agencies and car lots. They are used extensively for case referrals. By joining the organizations you can be placed in the directory. AUTO REPOSSESSOR'S RESOURCES ASSOCIATIONS: AMERICAN RECOVERY ASSOCIATION: P O Box 6788, New Orleans, La. 70174.

    Phone: 504-366-7377. Web Site: ALLIED FINANCE ADJUSTERS: 361 Grove Street, Neward, N.J. 07103. TIME FINANCE ADJUSTERS


    PUBLICATIONS: PROFESSIONAL REPOSSESSOR MAGAZINE 1330 Bowman Street, Clermont, Florida 34711 Phone: (352) 394-5001 Fax (352) 394-5570 Email: REVIEW OF THE NEWEST MANUAL ON HOW TO ENTER THE AUTO REPO BUSINESS




    By The Florida Department of State - Division of Licensing

    Category: Bank

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