S03.E21: Auto Lending

[Athena]

Main segment: Car finance and subprime lending
Segments: Donald Trump controversies, American Petroleum Institute lobbying

[Delwyn]

That API stealing from LWT thing is bonkers. Was someone in their marketing department convinced they had a crossover of fans between liberal satire on HBO and petroleum? Venn diagrams: you're doing it wrong. 

This was a very solid episode for me. Sharp, fast paced opening segments with a main story that incorporates both long game research and good balance of jokes with a typically depressing subject. Oh, and KMK, who is welcome on my screen under any circumstances. 

[Jamoche]

Well, fuck. I've watched a lot of afternoon Judge Judy lately, and last year when I had a broken ankle, so I've seen the car ads aimed at people with no credit, but I thought it was just the same used car sales tactics I'd grown up with - not a great deal, not a great car, but also not going to bury you in debt that you'll never get out from under.

Even that baby having fun didn't cheer me up.

[DrScottie]

58 minutes ago, Delwyn said:

That API stealing from LWT thing is bonkers. Was someone in their marketing department convinced they had a crossover of fans between liberal satire on HBO and petroleum? Venn diagrams: you're doing it wrong. 

 

Why obviously steal from the guy who makes it a point to call out greedy bastards? 

2 minutes ago, Jamoche said:

Well, fuck. I've watched a lot of afternoon Judge Judy lately, and last year when I had a broken ankle, so I've seen the car ads aimed at people with no credit, but I thought it was just the same used car sales tactics I'd grown up with - not a great deal, not a great car, but also not going to bury you in debt that you'll never get out from under.

See also payday loans, for-profit colleges, debt buyers, or any other predatory business that John Oliver has made a segment about or will at some point.  At this point, are we really that surprised anymore?  

[paigow]

Here in Canada, most credit cards that have no annual fee charge 18-20% interest on unpaid balances. So the Sub-Prime Auto financing rate is not unheard of, but clearly unsustainable for an extended period.  

[vibeology]

Obviously I don't know the situation fully, but if you live a ten minute drive from work, wouldn't it be faster to walk to work than spend nearly two hours taking a bus and two trains?

[peeayebee]

Trump having Resting Rich Face (RRF) is so perfect. What the hell was the thing with the chart? Besides what John pointed out -- that Trump didn't know what was on the chart -- the chart looked phony. IIRC, it was a jagged line going up a while then down then up, but all the time just jagged. It didn't look real to me.

One thing I didn't like in this ep was when John made fun of the bankruptcy lawyer's tone. The lawyer was obviously being incredulous that the car loan offer said "or all three." He wasn't excited about it.

I always love seeing Keegan-Michael Key.

[attica]

I don't understand what is attractive to the investors buying up subprime loans. Sure, sellers get fees and more fees, but who're the dumbasses that think there's a decent ROI in buying them? (Or maybe there is a decent ROI, I don't know.) Or is it just a place to park hedge fund pension money and who cares what the ROI is?

[Hanahope]

1 hour ago, vibeology said:

Obviously I don't know the situation fully, but if you live a ten minute drive from work, wouldn't it be faster to walk to work than spend nearly two hours taking a bus and two trains?

Or ride a bike.

That said, I know how this can be sometimes.  Before my husband got his driver's license (due to post 9/11 regulations, he couldn't get one until he got his permanent green card), I had to get up at 2:15 am to drive him to his work (which began at 3:00 am).  It took us 30 minutes to drive there.  He got off work at 12:00 noon, when I was already at work, so he had to take 2 busses home, plus walk 2/3 mile.  It took him 2 1/2 hours to get home, which if he could drive, would have only taken him about 45 minutes to drive (due to traffic).  And I had to deal with interrupted/lost sleep.  Fortunately, we only had to do this for about 6 months. 

[Primetimer]

Bad credit? They don't give a...well, you'll see.

View the full article

[Ottis]

I tried to find the part where Oliver offered an alternative, did he? I missed the last couple of minutes.

There is nothing mysterious or "unfair" about subprime loans, given the current American capitalist system. People who are high risk are charged higher interest rates ... because they are high risk. If they think the rates are too high, don't take out a subprime loan and find an alternative (bike, public transportation, a family or friend, car pool, etc.).

There are *wider* issues around people finding jobs that pay enough to afford various transportation options. And around the number of jobs themselves. But neither has anything to do with subprime loans.

Your only alternative is for someone (the government?) to decide what the rates should be, thereby determining the level of risk to the lender. If the risk is deemed too high, the lender will leave that market, and there will be one less option (however expensive) than there was before.

You can take a step back and say that from a human perspective, we as a society ought to offer an affordable transportation option for people who can't afford a car. But that, like a mandated higher minimum wage, is a different discussion than railing against subprime lending.

This video reminds me of all the "predatory lending" claims after the mortgage bubble burst. The government forced lenders to loosen lending rules so more people could buy homes, and then many of those people bought homes they had no business buying given their income. And then they bailed on them. That wasn't predatory, that was poor decision making by buyers. You can't win with this kind of issue. No universal solution is free, and if you start charging for it so that it is sustainable, then you are accused of being predatory.

[cattykit]

1 hour ago, peeayebee said:

One thing I didn't like in this ep was when John made fun of the bankruptcy lawyer's tone. The lawyer was obviously being incredulous that the car loan offer said "or all three." He wasn't excited about it.

That confused me, too.  I didn't think the bankruptcy lawyer was the least bit pleased about his clients being solicited to go into worse debt.

2 hours ago, vibeology said:

Obviously I don't know the situation fully, but if you live a ten minute drive from work, wouldn't it be faster to walk to work than spend nearly two hours taking a bus and two trains?

I dealt with a two-hour public transportation commute (and was still never sure of getting to work on time because SEPTA was so unreliable) for a while many, many years ago.  It wasn't a ten minute drive, though, and even if it had been, it wouldn't have been a safe walk.  I swore after that I'd never be without a car again, and I haven't been.

I LOL at LWT's API commercial.  Are they going to force them to take down their plagiarized fonts?

Edited August 15, 2016 by cattykit

[romantic idiot]

1 hour ago, Ottis said:

I tried to find the part where Oliver offered an alternative, did he? I missed the last couple of minutes.

There is nothing mysterious or "unfair" about subprime loans, given the current American capitalist system. People who are high risk are charged higher interest rates ... because they are high risk. If they think the rates are too high, don't take out a subprime loan and find an alternative (bike, public transportation, a family or friend, car pool, etc.).

There are *wider* issues around people finding jobs that pay enough to afford various transportation options. And around the number of jobs themselves. But neither has anything to do with subprime loans.

Your only alternative is for someone (the government?) to decide what the rates should be, thereby determining the level of risk to the lender. If the risk is deemed too high, the lender will leave that market, and there will be one less option (however expensive) than there was before.

You can take a step back and say that from a human perspective, we as a society ought to offer an affordable transportation option for people who can't afford a car. But that, like a mandated higher minimum wage, is a different discussion than railing against subprime lending.

This video reminds me of all the "predatory lending" claims after the mortgage bubble burst. The government forced lenders to loosen lending rules so more people could buy homes, and then many of those people bought homes they had no business buying given their income. And then they bailed on them. That wasn't predatory, that was poor decision making by buyers. You can't win with this kind of issue. No universal solution is free, and if you start charging for it so that it is sustainable, then you are accused of being predatory.

Yeah, e.g. the most concerning thing I heard was 0 pay down, which is nonsense for a secured loan. Those rules are what the Govt. should be legislating. 

I also found his intro puzzling. He was going after auto lending in subprime (and subprime lending has to be high interest unless subsidised by the Govt. to make up for the risk), but started with the need for cars, which made me think the segment was going to be about the lack of adequate public transport. Or is that a given, acceptable thing in USA - the lack of reliable public transportation?

[Ottis]

Quote

I also found his intro puzzling. He was going after auto lending in subprime (and subprime lending has to be high interest unless subsidised by the Govt. to make up for the risk), but started with the need for cars, which made me think the segment was going to be about the lack of adequate public transport. Or is that a given, acceptable thing in USA - the lack of reliable public transportation?

Pretty much. The assumption here in the US is that you need a car to get around in all but the biggest cities. The handful of places who have public transportation talk about how helpful it is. The vast majority of places don't offer much, or offer a hodge-podge of bus/train combinations. IMO, we shoot ourselves in the foot a lot. Like with Amtrak, our (sort of) national rail system, which takes 24 hours or more to cover a distance you can cover in 12 hours or less in a car, because there are a ridiculous number of stops because Americans won't stand for driving 2 hours to the train station. 

[MrWhyt]

4 hours ago, vibeology said:

Obviously I don't know the situation fully, but if you live a ten minute drive from work, wouldn't it be faster to walk to work than spend nearly two hours taking a bus and two trains?

it really depends on the geography. If i get lucky with traffic I can get from from one side of my (small canadian) city to the other in ~15 minutes, walking would be at least an hour.

[romantic idiot]

2 minutes ago, Ottis said:

Pretty much. The assumption here in the US is that you need a car to get around in all but the biggest cities. The handful of places who have public transportation talk about how helpful it is. The vast majority of places don't offer much, or offer a hodge-podge of bus/train combinations. IMO, we shoot ourselves in the foot a lot. Like with Amtrak, our (sort of) national rail system, which takes 24 hours or more to cover a distance you can cover in 12 hours or less in a car, because there are a ridiculous number of stops because Americans won't stand for driving 2 hours to the train station. 

So why isn't JP getting on his soap box about that? Though I daresay the cheap price of fuel doesn't help there. No incentive for reducing it.

[ALenore]

There's another trick some lenders do that John didn't mention.  My brother-in-law told me that some dealers force the customer to make weekly payments, because they know they'll be more likely to just forget a payment, or get it out a day or two late.  Then they come and repossess it, and resell it.  

[attica]

2 hours ago, Ottis said:

If they think the rates are too high, don't take out a subprime loan

I think part of John's umbrage is the predatory nature of the lenders/dealers. They depend on bait-and-switch tactics to ensnare the unsophisticated borrower (which is a incredibly large segment of our innumerate populace) , who needs a car more than they care about reading fine print.

[Jamoche]

I used to have a 20 minute car commute via freeway. Even half that was not a walkable or bikeable distance. Google maps says that's at least an hour and a half via transit, and that's only because I live right next to a major bus line.

[Muffyn]

Keegan Michael Key is my TV boyfriend. I love when he does the big, open smile. I am still not going to buy a car from him and Crazy Johnny even if it does come with a baby.

The new Rebecca and Andy were great, especially when watching the polar bear have sex with the API logo.

[ganesh]

3 hours ago, cattykit said:

It wasn't a ten minute drive, though, and even if it had been, it wouldn't have been a safe walk.

There's also the weather to consider. I had an 80 minute commute with train, bus, and walking both ways, and in the rain, it was just awful. The heat didn't bother me as much, but I can get for some people it could. And, you can't just stop and get an errand done on the way home because it could cost you another hour+.

1 hour ago, Ottis said:

Or is that a given, acceptable thing in USA - the lack of reliable public transportation?

I didn't have a car for 17 years because I couldn't afford it, but I lived in cities. Even then I didn't want to do much outside of work because I didn't feel like being on trains/buses for 3+ hours on a weekend. Even in a major city, it's not that good. Much less getting anywhere further. We should have had high speed rail at least up and down the coasts decades ago. 

[Ottis]

Quote

I think part of John's umbrage is the predatory nature of the lenders/dealers. They depend on bait-and-switch tactics to ensnare the unsophisticated borrower (which is a incredibly large segment of our innumerate populace) , who needs a car more than they care about reading fine print.

If that part of the population doesn't care enough to understand the basics of a loan, why is that predatory lending? if you are borrowing money, the very thing you are doing is borrowing X for Y amount of time time at an interest rate of Z, which results in a payment. When any of XYZ change, then the payment will change. That's not fine print. That's the basics of a loan. You don't have to be sophisticated to understand that. You have to have the discipline to not borrow more than you can afford. THAT is the problem in the vast majority of these loans, IMO. I'm an independent politically and have lots of issues with conservatives (most of them social), but I get it when they say some people who make poor decisions are getting bailed out and everyone else has to pay for it.

[b2H]

12 hours ago, DrScottie said:

Why obviously steal from the guy who makes it a point to call out greedy bastards? 

See also payday loans, for-profit colleges, debt buyers, or any other predatory business that John Oliver has made a segment about or will at some point.  At this point, are we really that surprised anymore?  

Don't forget gold and survival food.

[sinkwriter]

I don't think it's that people don't "care enough to understand the basics of a loan." A lot of times I think the wording could be made a lot simpler to understand. And when you start to get into percentages and API and fine print disclaimer language that makes it even harder to comprehend, people's eyes and brains start to glaze over. The banks and companies involved could make things a lot easier and clearer. But why would they? It's not in their best interests (so to speak) to do so.

[ganesh]

Or it's because people are desperate and make desperate decisions, unfortunately. One could have bad credit because they were a victim of identity theft and there's stuff stuck on their credit reports for 7 years. That's why it's a con. Scam artists take advantage of people. Sure, they should know better, but we kind of expect the government to protect us from predators. 

[sinkwriter]

Both, unfortunately. :(

[Machiabelly]

I feel dumb but the reaction  the crazy accountant received made me think I should know him...but I drew blank. Who was he.

[Epeolatrix]

Accountant was Bob Balaban, "an American actor, author, producer, and director. He was one of the producers nominated for the Academy Award for Best Picture for Gosford Park, in which he also appeared."

[angora]

He's also been in a bunch of Christopher Guest movies.

[Hanahope]

I thought it was incredible that the woman, who claimed she couldn't afford to pay more than $3,000 for a car, was on the hook for a car costing over $8,000, which John said was worth only $3,000.  What were all those extra fees?  And that was before you added up all the payments with the interest, which he was was over $15,000.  I wanted to scream at that woman that if she actually had $3,000 for a car, find a car for that price and pay it.  You can get a decent enough used car for that if you look around.

I know some car dealerships try to "close the deal" by making the buyer focus on what they can afford on the monthly payments, and thus they tend to ignore the actual cost of the car, or all the additional fees and interest.

[peeayebee]

9 hours ago, vibeology said:

Obviously I don't know the situation fully, but if you live a ten minute drive from work, wouldn't it be faster to walk to work than spend nearly two hours taking a bus and two trains?

Besides the reasons others here gave, your health of course determines how far you can walk. 

[mjc570]

 I don't really think there is much the gov can (or should, given that I am not an economist) do, in terms of subsidizing subprime loans.  OTOH, it certainly can require that forms be written much more simply and clearly, and can require that financial literacy be taught in schools, just  as it now has standards in math, etc.  If someone is going to undertake the risks of entering into such an arrangement, they should do so knowingly.

I could watch John do all Trump, all the time.

[atomationage]

I don't think there was anything new in the car loan story.  It's been going on for a very long time.  Governments have just relaxed regulations that they tightened up before.  I knew someone who served on a jury in a trial about a car dealer who had sold the same car so many times people couldn't believe it.

I'm sick of Drumpf, so rehashing his crap that was already reported all week long that I didn't want to hear in the first place, doesn't work for me anymore.  The last good one was JO's reaction to the Khan family being targeted by Drumpf.

Polar Bear's dick was the best part of the episode for me.  

Was Keegan Michael Key President Obama's anger translator a couple of years ago?

[ganesh]

3 hours ago, mjc570 said:

 I don't really think there is much the gov can (or should, given that I am not an economist) do, in terms of subsidizing subprime loans. 

Fundamentally, it's about informed consent, really. Doctors are required by law to inform patients of what they're getting into for any procedure. I'd say it's a matter of simplifying the forms, etc.

[Jamoche]

4 hours ago, Hanahope said:

I thought it was incredible that the woman, who claimed she couldn't afford to pay more than $3,000 for a car

I took that as her understanding that she could afford a loan for a $3000 car, not that she had $3K on hand.

But even if you have the cash available to buy a new car outright - which I've done - it's *really* pulling teeth to get the dealers to take it. And then they try to push more add-ons to make up for the interest they lost. If it's that obnoxious with the non-shady ones when you know what you're doing and are willing to walk out the door, imagine what it's like when you're desperate and clueless.

[peeayebee]

3 hours ago, atomationage said:

Was Keegan Michael Key President Obama's anger translator a couple of years ago?

Yup!

[movingtargetgal]

My husband was a high school teacher who taught a class on "street law and economics."   The class covered common sense things such as getting a credit card and how you can get under water by just paying the minimum payment, getting an apartment, signing a lease and your rights and responsibilities as a tenant, and taking out loans.  It had been a mandatory class for all seniors.  A new administration came in and ended the course because it was not academic enough and there were other subjects that were more important for the students to learn.  What can be more important than young adults to know their legal rights and be educated on how to manage their finances so they have a more secure future. 

[Victor the Crab]

4 hours ago, atomationage said:

Was Keegan Michael Key President Obama's anger translator a couple of years ago?

 

50 minutes ago, peeayebee said:

Yup!

KMK played Obama's anger translator Luther during the <i>Key & Peele</i> seasons, with Jordan Peele playing President Obama, brilliantly! At the 2015 WHCD, he played that same roll to the real President Obama with awesome results, thereby satisfying my silly wishful thinking.

Edited August 16, 2016 by Victor the Crab

[Kel Varnsen]

The auto loans thing is a tough one. One the one hand weaselly car salesmen suck and selling debt is super shady. But at the same time, if a third of these people default on their loans what kind of rate does the lender have to give to make a profit?

[withanaich]

  22 hours ago, peeayebee said:

One thing I didn't like in this ep was when John made fun of the bankruptcy lawyer's tone. The lawyer was obviously being incredulous that the car loan offer said "or all three." He wasn't excited about it.

That confused me, too.  I didn't think the bankruptcy lawyer was the least bit pleased about his clients being solicited to go into worse debt.

  On 8/15/2016 at 8:28 AM, vibeology said:

Obviously I don't know the situation fully, but if you live a ten minute drive from work, wouldn't it be faster to walk to work than spend nearly two hours taking a bus and two trains?

I dealt with a two-hour public transportation commute (and was still never sure of getting to work on time because SEPTA was so unreliable) for a while many, many years ago.  It wasn't a ten minute drive, though, and even if it had been, it wouldn't have been a safe walk.  I swore after that I'd never be without a car again, and I haven't been.

I LOL at LWT's API commercial.  Are they going to force them to take down their plagiarized fonts?

Ah, another SEPTA rider. Yeah, fuck SEPTA. Right in the ear. I just bought a car because I can't deal with them anymore. It's not always easier or even safe to "just" walk or bike.

[wknt3]

23 hours ago, attica said:

I don't understand what is attractive to the investors buying up subprime loans. Sure, sellers get fees and more fees, but who're the dumbasses that think there's a decent ROI in buying them? (Or maybe there is a decent ROI, I don't know.) Or is it just a place to park hedge fund pension money and who cares what the ROI is?

I'd recommend reading any of Michael Leiws' books on the finance industry. In the short term rates are high because they are subprime. And there is always a way to pool it and make it look like it's not really THAT risky and hey look at the returns from last year. This time it's different and we've found something with a really high ROI and low risk.

22 hours ago, Ottis said:

This video reminds me of all the "predatory lending" claims after the mortgage bubble burst. The government forced lenders to loosen lending rules so more people could buy homes, and then many of those people bought homes they had no business buying given their income. And then they bailed on them. That wasn't predatory, that was poor decision making by buyers. You can't win with this kind of issue. No universal solution is free, and if you start charging for it so that it is sustainable, then you are accused of being predatory.

Again read Michael Lewis or anything that's not an apologia for the home finance industry. Regulation played a part, but lenders' greed was a much bigger part. There are mountains of evidence that many lenders actively and knowingly engaged in deceptive practices since they could sell off their crappy loans to investment banks at a profit who could then bundle them up and securitize them. There were plenty of borrowers who made stupid decisions, but their lenders weren't forced into it. I work for a bank that didn't do subprime loans and kept our mortgages on the books. Yes we couldn't discriminate against minorities (which is what people often mean when they talk about being forced to lend to poor credit risks), but we managed not to make subprime loans. And our biggest critics weren't the government, but our investors and our colleagues at larger banks.

20 hours ago, attica said:

I think part of John's umbrage is the predatory nature of the lenders/dealers. They depend on bait-and-switch tactics to ensnare the unsophisticated borrower (which is a incredibly large segment of our innumerate populace) , who needs a car more than they care about reading fine print.

Totally agree. I occasionally see customers who have gotten into these loans or more often their families. The disclosures are often lacking and there are often high pressure sales tactics. And they are almost highly uncooperative when we are able to help out our customers and they try to payoff these predatory loans. I have no problems with high rates for high risk customers. I have huge problems with hard working low income customers with 810 FICO scores (very good) being sold cars with teaser rates and complicated terms that almost guarantee they will lose both their car and their credit.

[Jersey Guy 87]

6 minutes ago, wknt3 said:

Again read Michael Lewis or anything that's not an apologia for the home finance industry. Regulation played a part, but lenders' greed was a much bigger part. There are mountains of evidence that many lenders actively and knowingly engaged in deceptive practices since they could sell off their crappy loans to investment banks at a profit who could then bundle them up and securitize them. There were plenty of borrowers who made stupid decisions, but their lenders weren't forced into it. I work for a bank that didn't do subprime loans and kept our mortgages on the books. Yes we couldn't discriminate against minorities (which is what people often mean when they talk about being forced to lend to poor credit risks), but we managed not to make subprime loans. And our biggest critics weren't the government, but our investors and our colleagues at larger banks.

That's what caused the crisis. Yes, there was some loosening of the rules to make it easier for people with bad credit to get loans but it was the creation of the "synthetic CDO" that made it suddenly attractive for lenders to issue as many subprime loans as possible.  When there was no market to sell off the loans the banks didn't go out of their way to push them.  When synthetic CDOs made bad loans an asset that could be sold suddenly there was a huge desire to push loans on people who weren't going to be able to pay them.  The banks would not have aggressively pushed subprime loans unless they had a way to get the risk off their books and make some money.  Absolutely read Michael Lewis to understand what was going on.

[Ottis]

Quote

Again read Michael Lewis or anything that's not an apologia for the home finance industry. Regulation played a part, but lenders' greed was a much bigger part. There are mountains of evidence that many lenders actively and knowingly engaged in deceptive practices since they could sell off their crappy loans to investment banks at a profit who could then bundle them up and securitize them.

I agree this happened, however, no matter how complicated or deceptive the pitch, the basics of a loan are X amount borrowed, at Y interest rate, over Z years, results in a payment of ______. If any of XYZ changes at any time in the loan, the question is, "How does my payment change?" And if anyone tells you something like, "Your house will be worth so much more in the future, you'll be able to afford it," and you believe it, that's on you. This is basic finance. Poor loans wouldn't be sold if consumers recognized they were not a good deal and refused them. Consumers got greedy, and were already ignorant (and sometimes stupid), and that enabled the lenders.

[attica]

2 hours ago, Ottis said:

And if anyone tells you something like, "Your house will be worth so much more in the future, you'll be able to afford it," and you believe it, that's on you.

And here is the problem. In most other lines of work, that kind of behavior gets you a fraud charge. (See: the recently deceased Miss Cleo.) Even stupid people deserve not to be ripped off.

[Ottis]

Quote

And here is the problem. In most other lines of work, that kind of behavior gets you a fraud charge. (See: the recently deceased Miss Cleo.) Even stupid people deserve not to be ripped off.

This is too deep for a TV show thread, so I'll just note that all kinds of services and products come with questionable claims. Cars, diet foods, vitamins, parachute luggage, aquarium sea horses, time shares ... it's everywhere, and there are relatively few fraud charges. Stupid people have been ripped off since the dawn of time because they are stupid, not because anything was illegal or "wrong." The difference here is that making *all* of Wall Street and banks and lenders evil fits a narrative that continues today. There was some illegal activity, ITA. But there was also a lot of ethical, normal stuff. In both cases, stupid people tend to lose out. 

Now, if we want to talk about whether we even need some parts of the financial system, I can get behind that (hello, hedge funds).

[ganesh]

It's not fair to lay blame on people getting scammed. Not everyone can afford a financial advisor to protect them, and lots of people think there's laws, like fraud, protecting them anyway. Not everyone can spend 20 hours online researching everything. 

[wknt3]

7 hours ago, Ottis said:

I agree this happened, however, no matter how complicated or deceptive the pitch, the basics of a loan are X amount borrowed, at Y interest rate, over Z years, results in a payment of ______. If any of XYZ changes at any time in the loan, the question is, "How does my payment change?" And if anyone tells you something like, "Your house will be worth so much more in the future, you'll be able to afford it," and you believe it, that's on you. This is basic finance. Poor loans wouldn't be sold if consumers recognized they were not a good deal and refused them. Consumers got greedy, and were already ignorant (and sometimes stupid), and that enabled the lenders.

But the whole point of a deceptive pitch is that you hide Y and Z. Sometimes even X. So that people don't realize that are not getting a fair deal. So it's no longer just basic finance. Even if we ignore the whole desperation part of this piece that many people absolutely need a car to work and are basically forced into making what they know is a bad deal there is an element of fraud and deception. Again I've personally seen this. Basic finance is you are a bad risk so I charge you a high interest rate in case of default. It's not I lie to you and deliberately make it hard to pay back the debt because defaulting makes me more money. It's always easy to blame the victim and assume this is the same thing as buying the rust proofing or a time share or signing up for the credit card offer being pushed to college freshmen. Especially when you simply dismiss all evidence to the contrary. I'll happily agree as I'm sure John will that his piece didn't cover every aspect of this trend or address every larger social issue and policy that impacts the subject. But he certainly showed that this isn't just basic finance.

Edited August 16, 2016 by wknt3

[iMonrey]

Quote

It's not fair to lay blame on people getting scammed. Not everyone can afford a financial advisor to protect them, and lots of people think there's laws, like fraud, protecting them anyway. Not everyone can spend 20 hours online researching everything. 

I just have a hard time with this because it's really just as simple as understanding a.) what your payment is going to be and b.) knowing whether or not you can afford that payment. That's two basic things you should know if you're applying for a loan.  Now, if they tell you your payment will be X and it ends up being double X then you've been scammed. But if they tell you your payment will be X and it is in fact X but it just turned out you don't have X to pay every month, that's on you.

Someone last week made the case that the journalism story didn't feel especially timely and I'd argue the same regarding this car loan piece. On the one hand, I get that JO doesn't want to do politics every week, but on the other hand, we're in the middle of what could arguably be called the most important presidential election in history, so I have a hard time getting invested in stories about car loans right now, to be honest.

[ganesh]

5 hours ago, wknt3 said:

But the whole point of a deceptive pitch is that you hide Y and Z. Sometimes even X. So that people don't realize that are not getting a fair deal.

I was responding to this, so I think my point is valid. 

[attica]

I recently read a very good book about the sub-prime housing crisis, which has a lot in common with the discussion here. And then, just as now, the default position is to blame borrowers for a moral or intelligence failure, while overlooking the bad, even criminal, behavior of lenders. Even judges were reliably on the side of the lenders despite all kinds of egregious evidence that they were incompetent, fraudulent, and law-breaking. Your mortgage has been bought, sold, carved up, retranched without your knowledge or consent? You're being foreclosed by an entity that has no legal claim to your property (or none they can prove, which is the same difference)? Too bad: you're the villain for not paying on time. You're the deadbeat. There's no corresponding slur for the lenders/financial wizards, and there sure ought to be. 

Now, granted, a car is not in the same league as a house. But since there were no negative consequences for the moneymen in subprime housing, there isn't any reason for me to imagine repossessions are being handled any more legally than foreclosures were.