Friends car is in the process of repossession.

[Anonymous]

OK, first of all I just need to clear this up. I have worked at wholesale auctions for 8 years now, and I have to explain this all the time... cars at auction don't just get sold for nothing. Unless it's wrecked or otherwise drestroyed, you will never ever ever ever EVER see a current year model vehicle sell for $5,000. Period. That's just not how it works; auctions aren't the magical land of insane car deals the public thinks they are. 

I just did a market search on your friends car, without knowing specifics (specific trim level, motor size, trans, miles) I can't give an exact price, but 2014 Dodge Avengers with no options (base model) and 4 cylinder are bringing $11K with higher miles (over 15,000 miles) and almost $14K if miles are below 5,000. If it's not a base model he can expect it to do better at auction. These aren't made up numbers, these are what ACTUAL cars are bringing right now nationwide at auction. That's not going to pay off his loan and he'll still be responsible for the deficiency, but it's not as scary as the $5K predicted. 

Your friend needs to decide if he really wants to be on the hook for ~$10,000 on something he no longer owns. If there's any way he can suck it up and just pay the car down then he really should. Has anything changed since he got the car? These are the payment terms he agreed to then, it's not like an ARM and the rate changed out of nowhere. I'm sure Chrysler Capital will sell off the deficiency to a collection agency, so he'll have that on his credit report too. I know nothing about it, but it almost seems like he could consider letting the car go, then declaring bankruptcy once the banks go after him for the difference. 

[Anonymous]

I would imagine the KBB value that the OP saw was probably dealer trade-in value rather than retail.

[Anonymous]

---

@Anonymous wrote:

I would imagine the KBB value that the OP saw was probably dealer trade-in value rather than retail.

---

...which a lot of times is lower than what it's bringing at auction. This gives the dealer wiggle room if the customer decides to play hard ball and negotiate the trade. It also gives them breathing room to deal with market shifts. If trade value today is $10K and wholesale value is $11K and they decide to try to retail the trade in on their used lot and a month later it doesn't sell, the wholesale market could have fallen 10-20% depending on the time of year. This just gives them that much more of a cushion.

[Imperfectfuture]

That is not accurate. Major car dealerships have contracts with dealer owner auctions (look up Mannheim auto auction and adessa in Seattle, they are not open to the public).

I used to do contract work for both auctions (hence I called adessa up about my car, they wouldn't send it to the one I was currently working at). The dealers buy the cars for resale at retail. The auctions are considered WHOLESALE auctions. That way, there is double whammy collection for financier (though they bet against me, I was uncollectable).

[taxi818]

---

@RobertEG wrote:

As to the question in the original post as to potential impact on other exisiting credit, yes, current creditors can do internal account reviews that include pulls of his credit report.

Negative informaton on other accounts can become a factor in their assessment of current credit risk.

---

Absolutly. and some creditors will shut you down because you were late or missed with others. they are trying to save themselves before the boat completly sinks. so to say it will be ok is just not true. even though he has been ontime. i just hope your friend finds a way out. but imo. i just say let the car go. save his cash. and whoever shuts him down. say good riddance

your friend is already in the 300s on his credit scores. well we are already looking at years before his score is back up. so time to abandon ship .

[Anonymous]

---

@Imperfectfuture wrote:
That is not accurate. Major car dealerships have contracts with dealer owner auctions (look up Mannheim auto auction and adessa in Seattle, they are not open to the public).

I used to do contract work for both auctions (hence I called adessa up about my car, they wouldn't send it to the one I was currently working at). The dealers buy the cars for resale at retail. The auctions are considered WHOLESALE auctions. That way, there is double whammy collection for financier (though they bet against me, I was uncollectable).

---

I'm sorry, what are you trying to say is not accurate? I have worked in the wholesale auto auction industry for 8 years now. Five years were spent at Adesa (not Adessa) and I am well aware of how Manheim (not Mannheim) works. I currently work in management at an independent auction, but we operate the exact same way as the big two (Adesa and Manheim). We run 1500+ cars a week at auction, from over 50 new car dealerships and scores of independent dealers... I know all about how this side of the business works.

[Imperfectfuture]

Spell correct in iPad changed the names. Welcome to the forums.

What is not correct, is the price the cars will sell for at auction. No dealer is going to pay 10% to 20% below kbb for a car. Worked in the pits, so I saw what they were buying. A kbb of 8k sold for around 4k. They need to pay commissions, plus make profit in the retail side ONCE THEY BUY THE CAR. And they know most used car buyers are savvy, and want a deal.

I'm saying you are overestimating the wholesale value of a car. Kbb gives resale via retail, hiw many dealers are paying 10k forOP's car? PS, the auction needs their commissions too, plus detailing etc. goes into price (the add ons) that a dealer is willing to pay.

[Anonymous]

---

@Imperfectfuture wrote:
Spell correct in iPad changed the names. Welcome to the forums.

What is not correct, is the price the cars will sell for at auction. No dealer is going to pay 10% to 20% below kbb for a car. Worked in the pits, so I saw what they were buying. A kbb of 8k sold for around 4k. They need to pay commissions, plus make profit in the retail side ONCE THEY BUY THE CAR. And they know most used car buyers are savvy, and want a deal.

I'm saying you are overestimating the wholesale value of a car. Kbb gives resale via retail, hiw many dealers are paying 10k forOP's car? PS, the auction needs their commissions too, plus detailing etc. goes into price (the add ons) that a dealer is willing to pay.

---

No offense, but what exactly did you do at the auctions? You said you were "contract labor" were you a ringman? Block clerk? I've been doing this for 8 years, I talk to dealers every single day, that's my job. I want them to come in my doors. I need to know what makes them tick, what kind of cars they're buying. Why they're stocking up on cars, why they're not buying cars, etc. Dealers don't just give away cars for HALF of book value. 

Those dollar figures I cited were not made up out of thin air. Those were ACTUAL 2014 Dodge Avengers being sold at auctions in THIS market. I used Manheim Market Report (MMR) which is THE BOOK that wholesale dealers use when buying at auction (not KBB, not black book, not NIADA). This shows me what actual cars sold for- year/make/model/miles and the dollar amount. It gives me a real time evaluation of what cars are going for at any given time. 

I'm sorry, but if you think cars only bring half of retail at a wholesale auction then you either didn't really know what cars brought on a lot or you were at a bad auction. It's a whole lot more complicated than buying a car for $X and marking it up to $Y. Dealers make their money on interest, dealer added PAC fees, etc. And yes, I know all about auction fees (which ranges anywhere from $160 to $500 on every unit sold- a fee which gets collected from both the buyer and the seller). 

If you've ever attended an auction during tax season you'd know that many times cars sell for MORE than they sell for on the streets! Seems crazy right? Well, when a Buy Here Pay Here dealer needs inventory, he's willing to pay a lot of money for it. An old PT Cruiser that might bring $2K on craigslist is worth $3K at auction because right now EVERYONE is fighting over the limited supply of inventory. So the guy who buys the car takes it to his lot and prices it at $6K because he knows anyone who is buying from his BHPH lot doesn't have any other choice. He gets 20% down, charges 24% interest weekly and in a couple months he's made his money back on the car. The guy misses a payment he can repo it and start all over again. I know dealers who have sold the same car 6, 7, 8 times. 

Anyways, we're getting way off topic here. I was just trying to help out the OP, wasn't trying to start any arguments. But I eat sleep and breathe the auction life. It's what I do. So I get a little defensive of someone insinuating that I don't know what I'm talking about. 

[Anonymous]

Damnit... could he not state he wants more to go toward principal for each payment? I'd try calling them and talking to them. It's not a hole in the wall finance company.. its Chrysler. They may be able to work with him.

[Kevin5974]

You say that the loan is $22k or so. What you fail to consider is that you can call and cancel any/all extended warranties/GAP protections. These monies will go directly to the finance company. It would however help with the interest, should he cure the loan.

While I cannot stress enough that you or your boyfriend don't understand the ramifications of what that will do to your credit. However, I find it hard to believe that someone that has let himself fall this far behind, and have two other vehicles, is going to pay to bring this loan current.

I hope for the best but I will not be the blue guy in the corner holding his breath on this one...