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Bills Revise Repossession Process, Help Lenders

April 23, 2004

BATON ROUGE, La.--Senate Bills 374 and 768, which would revise Louisiana's singular procedure for repossessing vehicles, are pending final approval in the Senate. The proposed legislation would make the repossession process faster and cheaper. Lenders--who foot the bill when borrowers can't pay repossession expenses--and dealers support the bills. The high costs of repossession make lenders wary of providing financing to underqualified car buyers.

The way vehicles are repossessed in Louisiana is unique. Law enforcement agencies handle a large part of the process and earn fees and commissions, driving up the cost of repossession. It's often a major revenue sources for some local agencies, reported The Times-Picayune. In all other states, lenders manage the process, but lenders in Louisiana have to go through law enforcement to repossess vehicles. Sheriffs and city marshals are up in arms over the legislation.

Across the country, it costs roughly $500 and takes a little longer than a month for a lender to repossess a vehicle. In Louisiana, it costs about $2,000 and takes almost four months, according to Scott France, executive vice president of AmeriCredit Corp. AmeriCredit used to have six branches in Louisiana and made about 900 loans per month just less than two years ago. It has since closed its offices and makes less than 100 loans a month in the state, partly owing to the financial burden of repossessions.

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