Posted on 02/15/2020 3:51:48 AM PST by karpov
Cash for clunkers legacy.
“How does one expect to get a loan for a new car when they just defaulted on the loan for the old one?”
I believe that the default had not happened — YET.
The dealership basically said that the customer was ‘upside down’ but still making the payments, and was willing to sell the customer a new (or used) car.
After the new transaction the default would occur...the expensive older car would go away and yada, yada, yada...
That’s not us, Mate.
We are truly living in an upside down world.
Not even sure how this would work.
First, the bank takes the car and resells it at auction or dealership, etc. The difference of what is owed vs. what it was sold for is still a debt that the bank can collect against the person who took out the loan. They can garnish wages, bank accounts, sue, etc.
Secondly, how do they get a car loan again with a repo on their record? Bad credit.
Maybe bad credit loans out there charging 24% interest on a new loan?
Yes, that’s why I mentioned the illegal aspect. I have proximity actions set to off on my vehicles, even though start requires the fob to be within 3 feet. I notice that Land Rover(I think) is advertising all kinds of wireless or non-contact actions in their vehicles. Me, I don’t mind using keys and buttons.
I can see how someone could actually pull this off. Dump the car back at the dealership where you bought it, for safe keeping, send the lender a letter letting them know where it is.
Then, quickly jump into a new loan before the voluntary repo hits your credit report. The borrower has lag time after written notice is sent and lag time before the creditor reports it to the bureaus. They typically update once a month.
I am NOT SAYING anyone should do this. Just figured out how it could happen.
But for that to happen, would the person taking out a new loan have a debt ratio qualification to be able to obtain the new one while still having the debt on the old one?
Like the person has 400.00 loan payment on a car that is 25,000 and that was based on income and debt to ratio at that time.
Now they dump the car and immediately get a new loan with a payment of say 250.00 for a car that is 15,000. The loan company would look at that and say oh, they have 650.00 on payments for cars, plus home, CC, other loans, etc.
Just thinking this out- people get turned down for loans for debt ratio being too high all the time.
I take it that your son suffered no consequences, with you? or with anyone? Did you at least give him a peeved look? What is the proper way to handle such a thing?
They will ALWAYS take cash even you have bad credit. They will turn you down if you apply for a loan.
My barber (and barbers are as close as you can get to the old elevator operators who heard everything) warned me at my last haircut that the manufacturers are hiding cars that can’t be sold; this story is consistent with that.
Some great deals out there on new ‘18s and ‘19s.
Haaa! I cannot wait until people start filing lawsuits on never winning the lottery!!!...even when their ticket doesn’t have all the numbers.
People who default, steal, don’t pay all their credit card charges, ‘beat’ a system only cause the price to go up for those of us who do. I hear many parents talk about how they beat this and that and laugh. When I tell them that God knows everything we do they stop laughing...
I thank my God fearing parents and grandparents and many other wonderful Christian adults who lead by example. And, I thank my God for allowing me to pay all debt and never having to keep worrying that I cheated someone out of money I took for a material good. And, I thank God for my husband who has had the same God fearing parents and brought up likewise! AMEN!
Hoopdie Drivers Unite!
Good point. But, auto lender guidelines are more flexible than mortgage lenders on DTI.
Where the deal seems like it could fall apart is that car #2 could actually come with higher payments.
Car payments are pegged to more than just credit scores. The age of the vehicle and mileage determine the length of the loan the lender will do and have an impact on the interest rate.
A cheaper, older car with more miles may come with a shorter loan term, higher interest rate and bigger payment.
This makes me question the credibility of the story. That, and it’s in WSJ.
Not on the part of the sellers. It's the lenders that are at risk.
And I think the lenders are building this cost into their various charges.
Makes me wonder if the lenders are selling their loans to investment banks who are packaging them for resale to junk bond buyers who think they are ameliorating their risk by buying credit default swaps from big name European banks who are themselves laying off the risk.
This is, of course, the way the 2008 crash came about.
Yep. Just walk up with the master key, the door unlocks,and just drive away.
True. In my book a car dealer/salesman rates between a pimp and a politician. They would screw their own mother to make a profit.
Baptist pastor and theologian here-
Moses law cannot be implemented only in part, or piecemeal. When I sell you my labor or my land at a price, we both know going in what is going to happen at jubilee and the price/value is adjusted accordingly.
Furthermore, the tax/trade situation was completely different. Whereas Moses system never took more than 10% which went to supply the tribe of Levi, which had no inheritance in Canaan, today the American system takes including all levels of government and all unfunded mandates and hidden taxes, over 60%...and the Baptist church still wants the tithe!
Furthermore the Mosaic legal system was drastically free and unacceptably libertarian to Americans today. You can adopt the murder laws without the cities of refuge if you want, but don’t think that God is with you on that. You can claim old testament in favor of the death penalty if you want, but you are not about to release a murderer because you lack three eye witnesses. On the other hand a person who is guilty only of causing an accident must remain in the city of refuge until the death of the high priest, and if he is caught outside, the avenger of blood can legally kill him!
Furthermore, even if you could implement it in toto, you have no right to, as God intended it for the Israelites not us, and for them only in Canaan with His blessing. We cannot claim a promise for now for us, that He gave to someone else for then for them. Well we can I guess, if we want, just don’t think you can bring Him along.
A better way to understand Moses Law is to study the Sermon on the Mount, which explains it all beautifully at least what Jesus thinks you really need to know from a personal perspective. I cannot tell that any kind of “loan forgiveness” would be a good/bad thing, but I can say, “Seek first the kingdom of God, and all these other things will come to you.”
Forgive me if I seem like a scold. I know you are a fine FReeper and a patriot and a servant of God so take it for what it is worth. If I am speaking for God, and I have no such arrogance, then I say “loan forgiveness” is just a form of more stealing, stealing from a bunch of thieves no doubt. And I don’t know what to do about this situation and we better be open to any suggestion.
Quoting the Bible to justify doing what we want to do anyway has a long and storied history with us. So lets go for it!
You are of course correct. I was thinking lender and saying seller.
Giving 7-year car loans to people with credit scores of 450 is nuts
I think the fault lies with the credit score system. You are given a score based on your not doing this before for at least seven years. You are approved for the loan based on that score so you get to do this once. How would they stop you from the first time you do it?
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