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You go for a loan you can't afford, who's to blame?

Discussion in 'Economy' started by ethics, Jul 20, 2014.

  1. ethics

    ethics Pomp-Dumpster Staff Member

    Surely, the banks because the investors will be PISSED if people can't pay their loans back en masse.

    But shouldn't the blame also be at the people trying to get the loan? If you can't afford to repay why are you trying to get one?

    Auto loans to people with tarnished credit have risen more than 130 percent in the five years since the immediate aftermath of the financial crisis, with roughly one in four new auto loans last year going to borrowers considered subprime — people with credit scores at or below 640.

    Of course, this is where I blame both sides:

    The New York Times examined more than 100 bankruptcy court cases, dozens of civil lawsuits against lenders and hundreds of loan documents and found that subprime auto loans can come with interest rates that can exceed 23 percent. The loans were typically at least twice the size of the value of the used cars purchased, including dozens of battered vehicles with mechanical defects hidden from borrowers. Such loans can thrust already vulnerable borrowers further into debt, even propelling some into bankruptcy, according to the court records, as well as interviews with borrowers and lawyers in 19 states.

    So sick and tired of poor derelicts who can't do basic math and whining after their cars get repo'ed. Are you kidding me?

    http://nyti.ms/1yHGbOq
     
  2. tke711

    tke711 Oink Oink Staff Member

    Both sides are to blame. Banks shouldn't be lending to them and these people should understand they can't afford the loan to begin with.
     
  3. Biker

    Biker Administrator Staff Member

    In many cases, though, those that opt for those loans have no choice. They need a vehicle to get to work, and conventional loan avenues are closed off to them. I've been in that boat, did the math, hated the fact that I was getting screwed and they knew full well they were raking customers over the coals. But when you're desperate to find transportation before you lose your job, you pretty much grasp at anything you can get your hands on in order to secure that transportation.
     
  4. ethics

    ethics Pomp-Dumpster Staff Member

    Good points.
     
  5. MemphisMark

    MemphisMark Old School Conservative

    Memphis has a lot of "Buy Here, Pay Here!" lots. Less than 50 cars in inventory, all of them in shitty condition and in the poorest parts of town. All of them are designed to screw the buyer over as much as possible.

    Interest rates that surpass usury, and the lot sends the tow truck to hook your car the day after you are "late," which is usually three days for these guys instead of five. So, they get all of their money back (because interest is paid first), they get the car back so they can resell it, and as an extra knife in the gut, if the car sells for less that what is owed, the lot can collect that as well.

    This is why used car salesmen are right down there with politicians in the "most hated" job category.

    The lending companies are somewhat to blame, but remember what caused the last housing bubble? The Feds were threatening banks with "investigation and closure" if they didn't loan more to less creditworthy borrowers. The banks are trying to operate within the rules they have been given and are trying to still make a profit.

    Now we have "Operation Choke Point" (look it up) and all of the mess that it is causing. It won't be too long until the Feds will have to open a "Bank of the United States" and proceed to swallow every bank out there.
     

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