Author Topic: Auto Lending: Last Week Tonight with John Oliver (HBO)  (Read 3606 times)

PDXTabs

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Auto Lending: Last Week Tonight with John Oliver (HBO)
« on: March 23, 2017, 07:22:07 PM »
Not quite Antimustachian in that John Oliver is trying to point out just how inhumane and dangerous the situation is. However, still full of comedy:

https://youtu.be/4U2eDJnwz_s

Travis

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Re: Auto Lending: Last Week Tonight with John Oliver (HBO)
« Reply #1 on: March 24, 2017, 12:57:40 PM »
He's done better than this.  Predatory lending exists and is pervasive, but his two examples make you ask: could person #1 have used a bike? Why if person #2 knows enough about her personal budget that she could only afford a $3000 car did she sign up for an $8000 loan? Why did person #3 leave her child unattended?

The idea that sub-prime loans can still be turned into trade-able securities is quite annoying and shows we didn't learn a damn thing 10 years ago.  The ability to continue flipping a lemon is still something that needs work, but it's becoming easier to discover the mechanical history of a vehicle.  What Oliver's piece doesn't address is what is the solution for someone who is objectively a terrible risk to lend money to?

PDXTabs

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Re: Auto Lending: Last Week Tonight with John Oliver (HBO)
« Reply #2 on: March 25, 2017, 03:38:57 PM »
He's done better than this.  Predatory lending exists and is pervasive, but his two examples make you ask: could person #1 have used a bike? Why if person #2 knows enough about her personal budget that she could only afford a $3000 car did she sign up for an $8000 loan? Why did person #3 leave her child unattended?

From the perspective of predatory lenders charging usurious interest rates and utilizing the court system to either resell the same car over and over again or stick the buyer with thousands of dollars of debt after repossessing the POS that they sold them, I don't care.

This country didn't used to be about how much money you could trick people out of. In fact, after the US gained independence every state had strong usury laws, many capped interest paid at 6%. If your credit wasn't good enough to get a loan at 6%, no one got to make a buck robbing you blind.

gooki

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Re: Auto Lending: Last Week Tonight with John Oliver (HBO)
« Reply #3 on: March 26, 2017, 12:02:51 AM »
He's done better than this.  Predatory lending exists and is pervasive, but his two examples make you ask: could person #1 have used a bike? Why if person #2 knows enough about her personal budget that she could only afford a $3000 car did she sign up for an $8000 loan?

I agree he could have gone more in depth, and I highly suspect #2 didn't know they were signing a $8,000 loan. But still a good summary for all people to beware of auto lending.

gooki

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Re: Auto Lending: Last Week Tonight with John Oliver (HBO)
« Reply #4 on: March 26, 2017, 12:05:26 AM »
What Oliver's piece doesn't address is what is the solution for someone who is objectively a terrible risk to lend money to?

Don't lend them money they cannot repay, that will trap the further in the and guarantee they remain poor. Force those who need transport to think outside the box, carpooling, bikes, walking, running, public transport, uber, lyft.

Ayanka

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Re: Auto Lending: Last Week Tonight with John Oliver (HBO)
« Reply #5 on: March 26, 2017, 04:09:38 AM »
Or lend them the money the car is actually worth, at a higher interest rate. Add in the system that if you don't pay, the car starts beeping and they can stop it from a distance system and you would have a workable system. It really isn't always possible to take public transport, but this would make things a lot fairer.

Travis

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Re: Auto Lending: Last Week Tonight with John Oliver (HBO)
« Reply #6 on: March 26, 2017, 10:58:22 AM »
What Oliver's piece doesn't address is what is the solution for someone who is objectively a terrible risk to lend money to?

Don't lend them money they cannot repay, that will trap the further in the and guarantee they remain poor. Force those who need transport to think outside the box, carpooling, bikes, walking, running, public transport, uber, lyft.
Or lend them the money the car is actually worth, at a higher interest rate. Add in the system that if you don't pay, the car starts beeping and they can stop it from a distance system and you would have a workable system. It really isn't always possible to take public transport, but this would make things a lot fairer.

All great ideas that Oliver could have debated rather than using them as punchlines.

TheGrimSqueaker

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Re: Auto Lending: Last Week Tonight with John Oliver (HBO)
« Reply #7 on: March 26, 2017, 01:15:19 PM »
What Oliver's piece doesn't address is what is the solution for someone who is objectively a terrible risk to lend money to?

Don't lend them money they cannot repay, that will trap the further in the and guarantee they remain poor. Force those who need transport to think outside the box, carpooling, bikes, walking, running, public transport, uber, lyft.

I wonder whether there are any government initiatives pressuring lenders into the subprime auto market, the way they were pressured into subprime mortgage lending?

The Community Reinvestment Act and the American Dream Down Payment Assistance Act were well-intentioned, and they put significant financial and legal pressure on banks to not "unfairly" reject lenders with bad credit, low income, and other things that generally identify them as bad risks. The idea was to help level the playing field by providing people an opportunity to own a home, who wouldn't otherwise have had it. For the most part, the default rate is higher among subprime borrowers than it is among other mortgage borrowers, but it turns out that it's not the majority and it's nowhere near 100%. Walter Williams has written pretty extensively on the subject.

I definitely see parallels between the subprime mortgage market, which got pretty predatory, and the current subprime auto lending community.

Just Joe

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Re: Auto Lending: Last Week Tonight with John Oliver (HBO)
« Reply #8 on: March 27, 2017, 09:54:06 AM »
What Oliver's piece doesn't address is what is the solution for someone who is objectively a terrible risk to lend money to?

Don't lend them money they cannot repay, that will trap the further in the and guarantee they remain poor. Force those who need transport to think outside the box, carpooling, bikes, walking, running, public transport, uber, lyft.

The only people who seem to think outside of the box are the people who don't really need to think outside of the box b/c they can afford a car.

PDXTabs

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Re: Auto Lending: Last Week Tonight with John Oliver (HBO)
« Reply #9 on: March 28, 2017, 11:57:36 AM »
All great ideas that Oliver could have debated rather than using them as punchlines.

Well, he reports the news (in a satirical and humorous manner). How often do news casters suggest solutions?