Future Fords could repossess themselves and drive away if you miss payments

They are, in all other respects, the same as a traditional loan-based purchase.

> So you're saying car repossessions can yield a profit?

Yes! You don't understand how Buy-Here Pay-Here works if you're going on about auctions.

Here in CA it's been legally defined specifically to try and help protect a vulnerable population, but the MO is the same wherever you go:

- 90% of all their loans are kept in-house for 90 days

- The dealer does not primarily deal with new cars

That means if they repo the car within 90 days, they're out of pocket exactly the cost of the recovery and the depreciation... so they just lean heavily on cars that are at the end of their useful lives, then ask for just enough down to cover the repo and a sliver of profit.

They let the fish go, and hope the inevitable* happens within 90 days, so they take the car back and sell the account to collections for a few extra pennies. And obviously it's the junkiest of junk debt so it's not worth much, but there are bottom feeding collection agencies that will use barely legal tactics to try and squeeze just a tiny bit of extra blood from the stone.

* To understand how far these places are willing to go: CA needed to pass a law to prevent them from requiring in person payments and force them to disclose the trackers (most states don't require this).

That's because they'd require all payments to be made on-site, then have recovery waiting for the end of business to take cars. Can't get there because of work? Repo'd. Can't get there because of a court date? Repo'd. Can't get there because the POS they sold you isn't working? Repo'd and patched up just enough to hobble along enough for the next desperate buyer.

And to be clear, CA is in the minority in preventing that, this is still happening across the nation at a scale that's never been seen before.

-

To be even more efficient, they're starting to take on more of the collections processes themselves, often with disastrous results: https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes...

https://www.autoremarketing.com/bhph/three-ways-improve-coll...

> After five years, Fransen transitioned from a third-party collection environment to a buy-here, pay-here finance company and specialized in developing a successful in-house recovery department.

-

I mean seriously, what do you think the loss in value on a 150k mile 2005 Sentra with a mean belt squeal and an extra 1000 miles on it since the last repo is? They're dealing with desperate customers at the bottom of their list of choices so it's not even factored in into the price.

The only "wrench" in this is if someone manages to keep the car long enough that they can't keep the loan in-house... but by the time that happens they've already made their money: They didn't sell the car at a good price to a desperate buyer, the loan has matured so it's a little more, and it's not their problem if it needs to be repo'd.

Overall this is a discussion about the intersection of multiple massive industries that each do enough revenue to form their own countries. No offense, but you definitely don't know what you're talking about if you think you can reduce it to just needing to be "in the industry".

The trick is to lend me $100 on a $40 dollar car that I cannot sell for $70. Nevermind the fact that in most states I can't sell the car for any amount as the dealership owns the lien.

> There are strict rules what you can do state by state, but generally you can't repossess something worth more than the outstanding balance and keep the rest as a profit

A lot of articles have been written about scammy "Buy Here, Pay Here" autosales that exist despite the strict rules. Since the dealership is financing the car, they can tweak the initial balance and monthly payments to their liking, while following the letter of the law but hitting the repo quota on the same '97 Honda Civic.