With car financing at zero per cent, ‘who wouldn’t pay?’
When is a booming economy bad for business? Ask William Meany, president of Asset Inc. a Toronto based debt-collection consultancy.
“It’s sad times for the repo man right now,” says Mr. Meany, who also heads Repo Depo a wholly own subsidiary of Asset that holds auctions for repossessed cars, boats and such, on behalf of banks and other creditors that are owed money.
With low interest rates, consumers are finding it easy to make their monthly debt payments. And fewer defaults mean less business for Mr. Meany.
“Repossession across the board is really, really low,” he laments.
“Car financing is 0%- who wouldn’t pay?”
Sal Guatieri, a BMO senior economist, agrees the majority of Canadians have their debt under control. Borrowing costs at generational lows, combined “with the fairly respectable job growth we’ve seen has probably helped lower loan default and personal bankruptcy,” Mr.Guatieri says.
“While we have seen an increase in household credit that’s outstanding, the carryings costs have gone down,” agrees economist Brad Norwood of Scotia Economics.
Moreover, lenders have grown lenient in recent years, and regard repossession as a final resort for dealing with customers who have fallen behind on loan repayments. Most will agree to trim back the payment amount or frequency, or even forgo interest before sending a bailiff to collect someone’s car or evict a family from their home.
Meanwhile, Mr. Meany claims faux repo firms are muscling in on the seize-and-sell business, and misusing the word “repo” to draw in bargain hunters.
For example, if you key repodepo.com into a web browser, you’ll find information for U.S. furniture reseller that invites customers to “turn your surplus and used furniture into cash”
Definitely not a message that any self-respecting repo man would send out.
“The meaning of repo has been devalued,” complains Mr. Meany. “Every item we sell has been repossessed by a finance company.”
Good thing he has a backup plan. Although his company started out as a retailer of repossessed goods, that contributes relatively little to the company’s $100- million annual gross sales.
Today, Asset’s bread-and-butter is the implementation of Internet-based tracking systems for moneylenders. And that part of Mr. Meany’s business is benefiting from the economic upturn, as financial institutions ramp up the there lending to meet consumer demand.
“The finance business generally appears to be growing.
“What we’re focusing on now is deploying our systems,” he says, adding Asset is nurturing contracts with lenders in 13 different countries.
And although the repo side of things is slow, Mr. Meany has been in the collections industry since 1989- long enough to know this can’t last forever. “A good economy [now] means good business down the road,” he says.
Financial post
smartin@nationalpost.com
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