'The Car Was Repossessed, but the Debt Remains'


#41

I’m “lucky”…
I’ve had people tell me (paraphrasing), “You’re lucky because you know how to work on cars,” or “You’re lucky because you have all the tools to work on cars,” or “You’re lucky because you know how to pick out used cars and keep them running,” or You’re lucky because you don’t have any debt," etcetera.

I’m not lucky, not amazingly intelligent (I’ve got folks here who’ll vouch for that!), nor a financial guru. My dad didn’t work on his cars and didn’t really collect the tools. I chose to buy tools instead of waste money at Starbucks or buy lottery tickets and I chose to teach myself how to work on and pick out decent used cars, the hard way, by trial and error. I know people, to this day, who wouldn’t think of getting their hands as dirty as mine have been, many, many times.

Come to think of it, I suppose I’m lucky that I’m fit, not overweight, because I’m lucky that I work out, exercise, ride bikes, run 5Ks, walk when I play golf, and lucky I have free weights, a treadmill, and an old Air-Dyne, and eat healthful food.

Lucky people sometimes only appear to be lucky. Choices have results that are cumulative over the years. They have consequences, good ones and bad ones. I’ve made some bad ones, but I try not to make the same bad ones more than once.
CSA


#42

Do not know rule of 78 but"The rule says that to find the number of years required to double your money at a given interest rate, you just divide the interest rate into 72. For example, if you want to know how long it will take to double your money at eight percent interest, divide 8 into 72 and get 9 years."
My dad never taught me anything about finances, tried to teach the daughter,


#43

I don’t think banks use the rule of 78ths anymore. They did back in 81 but that’s the last time I had a loan from a bank. Credit Unions use simple interest on the unpaid balance-at least mine does as does GMAC etc. At any rate it essentially loads the interest payments at the front end of a loan and the principle at the back end. So on a four year loan, after two years, you will still owe most of the principle but you won’t be paying much interest. Doesn’t matter much if you go the full term but if you then trade or try to refinance or pay the loan off, you have been making payments just on the rental of the money. If you really want to know how to calculate it, just Google it.


#44

I’m not doubting you in any way

But you’re REALLY laying it on thick

You’ve made your point


#45

I’m not absolving the buyer of responsibility, which I feel I made fairly clear when I said I have no problem with repossession if the buyer stops paying, and so obviously I would not advocate making repossession illegal. :wink:

That’s pretty easy. The lending institution is considered the financial expert. It is required to evaluate the borrower’s ability to pay off the loan. If it grants a loan for a brand new Porsche to a guy making 25 grand a year, it obviously failed its obligation and gets penalized. Heavily.

OK. And? I realize this was in response to something I’ve already denied, but I think it should be pointed out that you’re saying this as though it’s a bad thing. I’m not interested in saddling some welfare recipient with 20 grand in debt just because some jerk dealership sees the opportunity to get her to spend her tax return on a down payment shortly before he takes the car back because she misses the first installment.

I have no doubt that there are as you say unscrupulous buyers out there who have no intention of paying back money which is borrowed, but I would submit that they’re very much more rare than the unscrupulous dealers who sell cars on payment plans they know their clients can’t afford. I will also point out that the stereotype which says that only the poor run around scamming people by taking out loans they don’t plan to pay back is bunk - it’s not only the poor. Rich people do it too. I’d wager they do it more often, because they can get away with it.

My sister-in-law routinely borrows money that she has every intention of paying back, but doesn’t, because she’s a financial idiot. She has no intention of scamming people - she’s just completely incompetent when it comes to handing finances. That thing I said up there about spending the tax return on a down payment? That’s her. She just did that, and now she’s spent all that money to buy a car with payments she will never be able to keep up with. They’re going to repossess it any day now, and her tax return will be gone, and the dealership she bought it from will put the car out front again and take some other rube’s tax return - and by the way they won’t be returning her trade-in either, and so she’ll have no car.

You can’t tell me that this is better than “eliminating” her from ever buying a car. I hold her responsible for her actions, but I also hold the dealership responsible because she is their target customer. They prey on the financially stupid. Their business model would collapse if they had to deal with responsible people.

We often say that a child will not learn to stay away from the stove until he burns his hand, but we do not translate that into the belief that we should grab their hands and press them onto the hot burner, nor do we put them in the kitchen and tell them how wonderful life will be after they touch the stove, and use every sales tactic in the book to convince them to touch the stove. Yet that is exactly what we do with the financial illiterate, and it has to stop.


#46

The ratio of dealers to buyers suggests that assumption is wrong on its face.

They are and they do today under a myriad of regulations. Banks are not the only issuer of loans. Buy here-pay here places cover their own loans. Peer-to-peer lending schemes make loans from an investor to the borrower also based on risk (see Lending Club). Most are covered by regulation at some level right now. These exist because there is a market for these high risk loans. If you take that away, the next step is the loan shark. Agian I ask, what’s the solution?

Actually I can. She is an adult, she entered into the contract willingly. She pays the price when she defaults. She doesn’t learn from this experience and does it again. She has a right to be stupid and the dealer has a right to do business. You are her brother, even you can’t tell her what to do. Why should any government be allowed to make the decision FOR her? Either indirectly by eliminating the dealer or directly preventing her from taking out a loan.


#47

No it doesn’t. We’re talking about intent. I highly doubt that most people who buy cars intend to stop paying on the loan.

This is honestly a tired argument. “Well we can’t pass that law because then someone might break it!” The solution is to put the loan shark in jail too. And yes, I’m aware that this won’t solve 100% of the problems. Nothing will, and demanding that anything be 100% effective is just another way of saying “I don’t like this, and demanding perfection, which is inherently impossible, is a great way to sabotage it so that it doesn’t happen.”

By this logic, telemarketing scams which trick seniors into blowing their retirement by sending it to someone impersonating their grandson should be legal. Ebay product switch scams should be legal - I mean, you have the right to be stupid enough to be fooled into buying a $1,000 picture of a television and I have the right to do business by tricking you with it, right?

Whether you like it or not, we live in a society of laws and until the anarchists take over it’s going to continue to be a society of laws. Those laws are designed to protect the citizenry from harm.

The intent of those dealerships is not to be a dealership. The intent is to use the car as bait to catch money, without ever losing the car. It’s the old “tie a string to the quarter and yank it back out of the vending machine” trick writ large, and interestingly the string trick would be considered theft, while intentionally only doing business with people who are virtually guaranteed to have to surrender the car back to you is not.

I find it very interesting that our society so fervently defends the right for businesses to prey on their customers, but at the same time loudly demands that their customers go to jail should they prey on the business. Which way do you want it?


#48

I started working on cars out of necessity. I first drove an old truck that broke down all the time. If I wanted to go somewhere, I needed to learn how to fix it. I went to the local library and make copies from the repair manual (now we have youtube and internet). I had a box of random tools from a neighbors garage sale. I learned how to replace fuel pumps, replace clutch, brake work, suspension, everything to the point where I actually rebuilt the engine. I wish I had a mechanic neighbor to help me but I didn’t. I had a $20 manual. I read it and examined the pictures and decided I was ready to rebuild the engine. Out with the old and in with the new. Then out with the new to replace gaskets that were not installed correct the first time. I carried tools in the truck because you never knew what was going to go wrong. I can’t say that I really miss that old truck but I will never forget all the mechanic lessons that I learned from that old truck. Still to this day, even though I can afford to pay to have my vehicles worked on, I still enjoy fixing my own vehicles. I am still considering building my own vehicle from the frame up. I am dreaming of 1920’s style board track racer as a daily driver.


#49

A 90 cubic inch Miller?


#50

Similar with modern 4 cylinder turbo and modern suspension. Keep the styling true to the pioneers roaring around in the murder drums.


#51

Your experiences sound very similar to mine. I have bought new and used cars, paying cash. I haven’t bought a new one in 20 years. It doesn’t float my boat.

Now, I prefer used cars or slightly used cars and the thrill of the hunt and the proud feeling of renewing everything and driving the things for 10 years or more at a total cost, a mere fraction of a new one.

I am not one to compete with the neighbors for the best status symbol.
CSA


#52

No, those are fraud.
That is significantly different than lending someone money you think might not be able to pay it back.
Truth in lending forms have all the information on them, you just have to read and heed them.


#53

Yes they are. So what? Businesses have a right to conduct business and consumers have a right to be stupid, according to the statement I was replying to.

A truth in lending form that actually told the truth to these people would have, in font large enough to be read without the aid of a magnifying glass, “There is no way in hell you will be able to meet the obligations of this loan.”


#54

I know what you were replying to.
If you think they are equal, then there should be no issue correcting the problem. People that commit fraud don’t usually sit behind a desk waiting for law enforcement to come calling. Should be easy…


#55

I don’t think they are equal - I think this laisseiz-faire approach to business as though all businesses are equal is exactly the problem. “Don’t interfere with car dealerships intentionally screwing their customers over because they have the right to conduct business” is the kind of hands-off approach that led to Ford getting away with the Pinto, and led to superfund environmental disaster sites throughout the country.

If you want to do business, you should have to do the kind of business you say you do. A car dealership says it sells cars. If its business model is actually to convince idiots to give them money and end up with no car, then there’s a problem that needs to be addressed. The idiot isn’t going to address it because he’s the one being conned. The dealerships aren’t going to address it for very obvious reasons. Consumers in general can’t address it because those dealerships won’t be hurt if ordinary, responsible consumers don’t do business with them and in fact they don’t want those kinds of consumers doing business with them.

The only entity that can solve the problem is a regulatory body. Everyone else either has a vested interest in nurturing the problem, is oblivious to the problem, or has no standing to address it.


#56

The problem with truth-in-lending forms is many require a lawyer to read them. Ever buy a house? Those are all truth-in-lending forms and not easy to read/comprehend. I’ve bought several homes over the years and refinanced a few times, and I need a lawyer to make sure I’m not getting screwed. I backed out of refinancing once because my lawyer couldn’t even understand what the wording was and the lending institute refused to change the wording.


#57

And yet, the big cities spend the most per student, and still turn out the most dopes…

;-]


#58

That’s quite a claim. Care to cite your source?


#59

my lease has 1 year to go but i have been getting emails to trade it in for a new car. dealer said they would appraise my car and than run the numbers. hmm, so if my residual buyout is higher than my current trade in value than i would have to pay the difference? he said maybe i am bored with my 2yr old car. and want a different car, maybe a nicer model?


#60

Although I tend to lean a bit more to the personal responsibility side, I also understand and agree with the remainder of what you said. I was only addressing the comparison to committing blatant fraud in the examples.