But default on your car payment, and you can expect to have your car repossessed almost immediately.
How is this possible? In a word, technology. The modern repo man uses a number of devices to find, track, disable and reclaim automobiles:
• Subprime loan underwriters often require borrowers to have their cars equipped with a device that allows the lender to remotely disable the ignition. GPS technology in the devices also lets a lender track a cars’ location and movements. Knowing where the vehicle is, and being able to remotely disable it, makes repossession a snap.
• Photographs are taken of “millions of plates a day, with scanners mounted on tow trucks and even on purpose-built camera cars whose sole mission is to drive around and collect plate scans. Each scan is GPS-tagged and stamped with the date and time, feeding a massive data trove to any law-enforcement agency—or government-approved private industry—willing to pay for it” according to Car & Driver magazine. The license-plate acquisition system called Vigilant, adds 100 million photos a month.
• License-plate-readers, or LPRs as they are known, are now commonly found at mall entrances, mounted on utility poles, parking lots, toll plazas, and at major highway entrances. According to the site Consumerist, the database of scanned license plates contains “over a billion sightings of individual cars ready for companies to mine.” One company, MVTRAC, has 8,000 fixed cameras, and many more mobile cameras mounted on vehicles, constantly scanning plates.
• Some repo companies are using drones to track vehicles and repossess cars; they also can track drivers via their own mobile phones.
With delinquent subprime auto-loans, the repossession process is so much faster it doesn't have the same drag on the local economy. The cars are too easy to find, repossess and resell, mitigating the losses on loans gone bad. A surge in repossessed cars may end up increasing the number of used cars for sale, but other than that, don't expect to see the huge write-offs by mortgage lenders that caused so much harm to the financial system and broader economy.
So, no, subprime auto loan don't have the makings of the next subprime mortgage crisis.