Posted on 07/20/2014 7:19:57 PM PDT by 2ndDivisionVet
Rodney Durham stopped working in 1991, declared bankruptcy and lives on Social Security. Nonetheless, Wells Fargo lent him $15,197 to buy a used Mitsubishi sedan.
''I am not sure how I got the loan,'' Mr. Durham, age 60, said.
Mr. Durham's application said that he made $35,000 as a technician at Lourdes Hospital in Binghamton, N.Y., according to a copy of the loan document. But he says he told the dealer he hadn't worked at the hospital for more than three decades. Now, after months of Wells Fargo pressing him over missed payments, the bank has repossessed his car.
This is the face of the new subprime boom. Mr. Durham is one of millions of Americans with shoddy credit who are easily obtaining auto loans from used-car dealers, including some who fabricate or ignore borrowers' abilities to repay. The loans often come with terms that take advantage of the most desperate, least financially sophisticated customers....
(Excerpt) Read more at cnbc.com ...
Used-car salesmen never seem to get caught. Either that, or they persuade the officers trying to arrest them to purchase a vehicle.....
Some of these ‘car dealers’ have a creative business plan.
The down payment covers their car cost. Then they finance the rest. When the customer does not / cannot make payments, they repossess. They get the car back for another round. They do not check credit history because they are in a win/win.
Sometimes the customer knows this will happen, but is willing to pay a premium for a car for a few months until repossessed.
the used car market has been screwed up since 2009, when cash for clunkers destroyed nearly a million cars.
I am now hearing ads for LEASING “certified” used cars. When will the insanity stop?
I’ve noticed that. Piece of junk old cars for $4-8,000 with $995 down payments or thereabouts. That explains it.
Ended up buying a new car with about the same monthly payment because the finance rate was 3%!
Does this mean the prices for used cars will drop back down into the “reasonable” range?
“This is the face of the new subprime boom. Mr. Durham is one of millions of Americans with shoddy credit who are easily obtaining auto loans from used-car dealers, including some who fabricate or ignore borrowers’ abilities to repay. The loans often come with terms that take advantage of the most desperate, least financially sophisticated customers....”
He was walking before and now he is walking again. Got to drive for several months with out making a payment. Who’s the victim.
if he knew his situation why did he even consider taking the loan?
moron.
Another problem is that of too many overpriced used cars that develop serious problems after 3 or 4 payments. No such thing as a reliable,low-priced,affordable used car any more in most instances.
The simple fact is that the Fed has extended the Community Reinvestment Act to loans of any type, effectively making it illegal for banks to deny loans to Eric Holder’s people.
It also doesn't help that due to a lot of safety/efficiency regulations, new cars are now unaffordable to most people. Naturally, this raises the cost of used vehicles as well. We are spending more on transportation than we used to, but we need it so we take the risks.
“if he knew his situation why did he even consider taking the loan?”
That’s how I feel-—the sob stories about those who were “tricked” into buying houses they couldn’t afford also bothered me.
.
Used car salesmen have always been at the forefront of creative financing.
Playing devil’s advocate - at one time you could not get a mortgage or loan unless the bank believed you could pay it back. Sure, a shady salesperson could make you a “deal,” but if you didn’t have the credit or income the bank would turn you down flat. People who are honest about their income who get approved for a loan naturally think if the bank thinks they can pay it back, the bank knows best. It really is buyer beware. The bank, through a stringent approval process used to be an extra layer between zealous salespeople and dumb consumers. No more.
I used to be in the used car high risk market. I have served in well respected positions of finance companies and banks serving dealers in sub prime auto finance.
The people we were lending to had no other choices. Today, with few clunkers the average guy can afford, people have very limited options for a vehicle on the secondary market. With the federal government taking over so many of the day to day functions of finance and lending I am surprised banks are in business.
Would you lend a vehicle to somebody with a 600 credit score, poor job history, one or two prior repos, a forclosure? Add a bankruptcy to the mix. There is a reason these folks are high risk.
Bump and amen. Two years ago when I was looking for the truck I now own, many dealers cursed nobama for the cash for clunkers program. They said it will take years for the used market to stabilize again.
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