Nationally, analysts say, delinquencies and defaults on loans are up sharply, as financially strapped consumers struggle to keep up with rising fuel and food prices. The American Bankers Association, which tracks consumer loans, says car loans make up about half of banks' total consumer loans.
Delinquencies were up in all categories of fixed-end consumer loans - car, home equity, personal, recreational vehicle and marine loans - during the fourth quarter of 2007, the most recent period for which ABA has figures.
"It's the first time in 15 years we've seen that," said Carol Kaplan, an ABA spokeswoman. She said a loan is considered delinquent if it is more than 30 days past due.
Lenders don't like to have to repossess vehicles because they lose money on them, according to Kaplan and others in the auto finance business.
"No lender wants to take a repossession," said Rick Apicella of Benchmark International, which does consulting work for the automotive finance industry.
He said lenders lose more than $8,000 on average on each vehicle they repossess. Such vehicles are usually taken to auction. But prices for used cars are down and that adds to the losses for lenders, he said.
Tom Webb, chief economist for Mannheim, the nation's largest vehicle auctioneer, said 1.5 million vehicles were repossessed nationally last year - up 10 percent from the year before. About 80 percent were sold at auction, he said, and the others went to used car lots or were sold over the Internet or through other methods.
Apicella said the growing volume of delinquent loans prompted many lenders to change their collection practices to be more lenient with borrowers as a way keep them in their vehicles. "They say, 'Maybe we can allow you to skip a payment and extend the term of the loan,'" he said. But lenders eventually have little choice.
A car loan normally has to be delinquent at least 60 days before a lender will initiate repossession, although Maryland law allows a lien holder to take back a vehicle if a borrower is so much as a day late on a payment.
A Web site for ADP Recovery Inc., a repo company in Rosedale, features a banner saying, "Support Your Local Repo Man - Miss Two Payments." It also advises lenders that "we work around the clock, so if you have a case that needs special attention, just say the word and we will make it happen."
Workers at ADP's lot referred questions to a manager, who was not available.
