It's troubling that credit unions and banks selling repossessed vehicles via local car auctions lose/charge off to loan loss fifty to sixty percent of a borrowers loan balance. The average loss per car is tremendous. Credit unions and banks are losing 10's of thousands of dollars each month and billions of dollars annually to charge of losses when repossessed cars are sold via auto auction.
Part of the reason that financial institutions do not try to sell them on their own is because they do not have the space or think they do not have the space. Going to the trouble of finding a lot to store the vehicles and setting up someone to cover the lot is not easy. The other reason credit unions and banks do not sell the cars they repossess is because when they have kept them cars, advertised them in the local paper and waited for the bids then sales to come in the results have been less than stellar.
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One major hurdle to selling the repossessed cars and trucks is getting the word out that they have vehicles for sale to credit union members and bank customers, and the public. There is a solution to this dilemma. The way to solve the problem of visibility and get the cars sold is to harness the internet. Credit unions and banks usually have really great websites most of which are visited by their members daily and for sure weekly.
With the tremendous amount of website traffic already coming to credit union and bank websites the straight forward approach to selling the units and saving tons of money is to set up an easy to navigate website with a car database attached, run and ongoing ad in the local newspaper in the display section and a couple ads in the classified section, ad the units to craigslist.org. By selling the vehicles themselves they eliminate the middle man, the used car dealer, save the credit union or bank money more often than not, and help borrowers in a tough bind pay back less money in the end on the remaining balance
WHY THIS WORKS: Using this strategy drives website traffic to the parent company, credit union or bank website which can mean they make more loans and incur fewer or lower losses on repossessed cars and it means borrowers that had to give up their car potentially end up with much lower remaining deficiency balances after their repossessed car gets sold. Everyone loves a great deal. In today's economy we are shopping for homes being sold on short sale, groceries with coupons, and now the public might be able to buy them just like the used car dealers at the local auto auction but without the middle man eating up the savings. In the end just maybe everyone can end up ahead in the situation.
Setting up dedicated repossessed vehicle websites by the credit unions and banks is perfect in this day and age. By delivering the repossessed units to the local auction all the credit unions and banks are doing is taking the proverbial path of least resistance. The credit unions and banks take a huge beating losing anywhere from fifty to sixty percent to charge off.
For example if a borrower has a balance owed on a car of $10,000 and the car goes for $5,000 at auction the loss incurred is a whopping $5,000. Sell 20 of those in a month and you're talking a $50,000 loss in one month at one institution. A repo website tied to the bank or credit union website could save the institution tons of money in charged off losses.
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