How Wall Street Makes Millions Selling Car Loans Customers Can’t Repay

[Nighthawk]

Lenders profit while borrowers buckle under debt charging as much as 29.99% interest. The industry says it’s throwing a lifeline to customers with bad credit who need transportation.

One spring afternoon in 2019, James Siler wrapped up his shift as a church custodian and headed to a used-car lot in Valdosta, Georgia. He wanted to replace his broken-down old Pontiac Grand Prix, which he’d bought for about $500.

Siler and his wife, Janice, had filed for bankruptcy only six years before. Still, the salesman at Langdale Hyundai of South Georgia showed him a true upgrade, a one-year-old silver Ford F-150 truck. Janice, a school cafeteria cook, took out a $30,000 car loan. Her credit was weak, but stronger than his. “Mr. Siler, we’ll stay here as long as it takes,” he remembers the salesman telling him.

What happened after Siler grabbed the keys to his new truck amounts to an astonishing feat of financial alchemy: A risky loan became a rock-solid investment, part of a fine-tuned money-making machine.

A US unit of Spain’s Banco Santander AG bundled Siler’s financing together with 75,374 other auto loans…

… using this giant pool of debt to create an asset-backed security.

https://www.bloomberg.com/graphics/2023-wall-street-subprime-car-loans/?srnd=premium

Sounds familiar to our GREAT FINANCIAL CRISIS COMMUNITY?

 

[schizo]

What happened after Siler grabbed the keys to his new truck amounts to an astonishing feat of financial alchemy: A risky loan became a rock-solid investment, part of a fine-tuned money-making machine.

A US unit of Spain’s Banco Santander AG bundled Siler’s financing together with 75,374 other auto loans…

… using this giant pool of debt to create an asset-backed security.

https://www.bloomberg.com/graphics/2023-wall-street-subprime-car-loans/?srnd=premium

Sounds familiar to our GREAT FINANCIAL CRISIS COMMUNITY?

It's just another typical CDO. Anyway, don't expect Wall Street to learn from the past. They never do. In the end, they just rebrand their fraud under another fancier name.

 

[ktm]

So they're supposed to deny loans to people with bad credit? These folks are disproportionately black. I've read a number of times over the years that the gov't would severely punish companies that engaged in such "racist" behavior. Sounds like they have no choice but to print the money!!

 

[Frederick Foresight]

So they're supposed to deny loans to people with bad credit? These folks are disproportionately black. I've read a number of times over the years that the gov't would severely punish companies that engaged in such "racist" behavior. Sounds like they have no choice but to print the money!!

No, they should just charge usurious rates, bundle up the shaky loans, and sell them as prime asset-backed investments to unsuspecting investors.

 

[M.W.]

Lol, YES. You are supposed to get denied with bad credit, until you are able to fix your bad credit. Are you suggesting ripping you off is a better way because then I don't allegedly discriminate against you?

An entire country and actually world got fucked because the then administration thought it would be wise to promise everyone, regardless of credit worthiness, their own home. Remember that?

So they're supposed to deny loans to people with bad credit? These folks are disproportionately black. I've read a number of times over the years that the gov't would severely punish companies that engaged in such "racist" behavior. Sounds like they have no choice but to print the money!!

 

[murray t turtle]

Lol, YES. You are supposed to get denied with bad credit, until you are able to fix your bad credit. Are you suggesting ripping you off is a better way because then I don't allegedly discriminate against you?

LOL\ some used car dealers or payday lender$ would not consider it a rip off
Even if the down payment[ which they dont usually disclose makes a profit right then] even they have to repo it LOL.I remember Bishop Jakes, a black Bible preacher said ''blacks were the only people that did not cut back spending in 2008''
So really if customer agrees to a HIgh price or high interest rate , not really a rip off.
Strangely I bought/traded blue HMC for a white TM from a black used car dealer + the white lady that did the paperwork was ''a coal miners daughter '' LOL Good deal; so we cant assume black auto dealer selling a white car is a rip off .
Even more strange, he threw in 2 black tires, VERY good shape LOL

 

[mikeriley]

So really if customer agrees to a HIgh price or high interest rate , not really a rip off.

I'm black, and I approve of this message.
Financial illiteracy is not discrimination.

 

[S2007S]

Americans Are Overdue With Their Car Payments At Highest Rate In Nearly 30 Years


This article came out a few weeks ago

Seems between car loans and student loans no one can afford to pay anything back, even credit card debts......but yet they still continue to say the consumer is strong and spending which makes up 70% of gdp is doing quite well....something just doesn't add up.


https://www.forbes.com/sites/antoni...-payments-at-highest-rate-in-nearly-30-years/

 

[M.W.]

Can confidently cut US GDP in half, majority of shit is just bought and shipped from China and resold at a higher price because to stupid consumers. That's the definition of American productivity. Sad but true.

Americans Are Overdue With Their Car Payments At Highest Rate In Nearly 30 Years


This article came out a few weeks ago

Seems between car loans and student loans no one can afford to pay anything back, even credit card debts......but yet they still continue to say the consumer is strong and spending which makes up 70% of gdp is doing quite well....something just doesn't add up.


https://www.forbes.com/sites/antoni...-payments-at-highest-rate-in-nearly-30-years/