With the current economic state, the number of foreclosed trailers has increased dramatically. The foreclosure process on trailers is similar to that for homes or automobiles. When the lessee of the trailer falls behind on payments, the bank or lending institution has to determine whether or not the individual will be able to continue making payments. If the bank decides that the individual will not be able to make payments, then it begins the foreclosure process. Essentially, before a bank forecloses on a trailer, the borrower can still redeem the trailer if he or she pays back the debt amount; however, once a trailer has been foreclosed, the borrower loses that right and the trailer becomes the full property of the bank or lending institution.
Before trailer foreclosure, individuals have some other options. One option is to try to refinance. By refinancing, the borrower can change the terms of the loan to either lower the interest rate or lengthen the term – the goal of either would be to lower the overall monthly payment. Another option is a short sale. In a short sale, the lender agrees to allow the trailer to be sold for less than the amount of the loan and takes a loss. Finally, an individual may be able to file for bankruptcy, but this would be the last resort.
Although trailer foreclosures are very unfortunate for the owner of the trailer, it can be a great opportunity for someone looking to purchase a trailer. Foreclosed trailers can often be purchased at far below the actual value of the trailer. In many cases, you can find a like-new trailer for up to 80% off of the new cost. This is possible for a few reasons. First of all, all trailers depreciate the moment they leave the dealership lot. Any used trailer will be significantly cheaper than the equivalent new trailer. However, unlike your standard used trailer, foreclosed trailers tend to be in excellent condition. The borrower often defaults within the first several months of ownership, and, if the borrower has been having money issues, than he or she most likely was not using the trailer much.
Another reason foreclosed trailer are sold at such a low price is that banks are not in the business of selling trailers. In fact, foreclosed trailers are a significant financial and business liability for banks. First of all, the bank has to pay storage costs for that trailer. The larger the trailer, the higher the storage costs. Second of all, the leftover loan amount on the trailer counts against the bank’s overall money-loaning capability. The bank is no longer making money on the loan amount of the trailer, and yet the bank also cannot loan that amount of money as long as the trailer remains in its possession. Therefore, it is in the bank’s best interest to get rid of that trailer as soon as possible, even if it cannot recoup its entire loss. The easiest way for a bank to get rid of foreclosed trailers is to hold an auction.
Generally, these auctions are attended by dealers who turn around and sell the foreclosed trailer with as much as a 30 – 40% markup. Although buying a foreclosed trailer from a dealer will still give you a better deal than purchasing one new, you will get the best deal by attending an auction yourself. This can be tricky, as bank auctions are not always publicized. One way to find bank auctions is to call local lenders and ask when they plan to hold them. Another way is to sign up for websites that provide dates and locations of bank auctions.
Before you purchase your foreclosed trailer from an auction, take the time to do your research. It can be tempting to run right out to the first auction you find and bid on the first decent trailer you see, but you may regret this. If possible, attend several auctions before you actually bid on a trailer. This will help you get a sense of the prices of foreclosed trailers and of the process at the auction. Once you are ready to bid on your trailer, be sure to inspect it ahead of time.
If you take your time, you can get a great deal on a foreclosed trailer.
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