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I agree with you in theory, except that the artificially high prices and higher interest means that the people most at-risk for default are then made MORE RISKY

I agree with you in theory, except that the artificially high prices and higher interest means that the people most at-risk for default are then made MORE RISKY. I understand that a bank has to be careful with high risk loans, but this is effectively like tying a ball and chain to an olympic runner, and then sending them to prison when they lose the race. And frankly, all of that is forgivable; what is not is when the dealers then use these remote GPS devices to disable the vehicles, with NO GODDAMN IDEA what the vehicle is currently doing: Sure, they could tell if it was on the highway but would they actually care? And what if the person is working a night job, as many in poverty do? How do they get home? Or what about the case awhile back of the woman who's baby was in the damn car when it was towed? I get it, it's a business risk, but these things are DESIGNED, purposely, to fuck people out of their money and do tons of damage besides that. Exactly how much is a bank allowed to ruin someones life over a CAR LOAN? Crap like this is why we need a Consumers Bill of Rights.

lotsofpulp 9y ago
What do you mean by artificially high price and interest? I'm not familiar with Canada's auto sales market, but unless some organization has a monopoly on selling cars and there is a monopoly of lenders, then there are usually a sufficient number of buyers and sellers in the auto market so that price discovery is happening in sufficient manner such that neither the buyer nor seller are at an advantage. Also, unless there is data, I don't believe a company would disable a car in a manner that would be unsafe for anyone, at the least since it's a massive liability for them and there's no reason to. If anything, the GPS/car disabling would allow for lower costs for buyers since there is less risk for the lender, which would benefit the buyers who are responsible.
- djrogers 9y ago
  You don't have to be familiar with Canada's auto sales market to see this - there are dealers like this all over the US, you just aren't aware of them because you haven't tried to buy a used car with a horrible credit score and no cash (good for you BTW). These "tote-the-note" lots proliferate in low-income urban areas, and often offer sub-standard cars at higher prices than the traditional used car market, and top it off with really high interest rates. Often they will sell and repo the same cars over and over, taking payments and down payments until the buyer hits a streak of bad luck or poor decision making. On one had, the fact that these dealers do repo cars so often sorta justifies the big interest rates - after all, why would you loan money at a higher risk without a higher return? The flip side is that this tends to be very bad for society as a whole, making it insanely more expensive to be poor.
  - thomaskcr 9y ago
    I think you're making assumptions on intent/motivations. It's not like you can't bring your own financing to any car dealer, if you really can't secure a loan from anyone else - then for these used car lots the costs of being willing to deal with that market are rolled into the price of this car. They aren't just a lot, they are a high-default finance and repo operation also. They need to pay additional insurance, monitor their cars - their rates can't be great and every car requires some version of gap insurance on their end probably at least for a while if they're rolling these costs into the sale price and then requiring no or little down payment. I assume since they're smaller operations their money has a higher time-value to them -- i.e. if a higher than normal number of people pay late one month, they may be late on their debt payments since I assume they have some type of line of credit and they themselves probably don't have the best rate. I don't think they are specifically out to mess up people's lives is all I'm saying, it's easy to get caught up in the emotional side of a car repossession but think about if a client didn't pay you and you were racking up credit card interest waiting for them so you can pay your own bills -- would you feel bad about taking back your work after a certain period of time?
    - FireBeyond 9y ago
      > every car requires some version of gap insurance on their end probably at least for a while if they're rolling these costs into the sale price When you're selling a Kia with a KBB of $3,000 for $13,000, I'm going to assume you've adequately "factored in your costs" without resorting to gap insurance (which is going to be huge, because the insurer is going to pay fair market on KBB, not what you sold the car for) other than (further) extortion. > they may be late on their debt payments since I assume they have some type of line of credit and they themselves probably don't have the best rate. Hah. I had to use a subprime dealer after my divorce (not to the extent of GPS / immobilization, but 'pricy'). A year or so after buying the car, I got a call from a bank that I didn't recognize, saying that I owed them $2,000. This was the same amount that I'd written on a check for the down payment on the car. Sure, a cancelled check stub saying "Sorry, I paid the dealer the down payment" cleared it up, but something was awry. Six months later, their multiple locations are shut and another bank has them in court for breaches of contract that I think ended up as fraud proceedings against the dealership owners for multiple financing issues (mind you, they were both still driving their Bentleys)...
- Jesus_Jones 9y ago
  In poor areas, there are often fewer dealers, because you have to deal with poor people who have less access to money. It's often more profitable to sell expensive items. If you do serve a poor area, you are very likely to be able to force terms that are onerous. On the second issue, what if you drove that car out for a hike and its cold and started raining, and now you can't get inside it? What if you need to drive someone to the hospital? Of course, they can just die, because they are poor.
- mikeash 9y ago
  Most people have a low understanding of how financial products work. The lender, on the other hand, does this for a living. Most buyers are at a huge disadvantage.
- FussyZeus 9y ago
  > Also, unless there is data, I don't believe a company would disable a car in a manner that would be unsafe for anyone Looking past the fact that I already gave you one example, how would they know? The GPS device knows where the vehicle is, what it's running state is, and that's it. They don't know if the vehicle is stopped helping another person on the side of the highway. It doesn't know if the driver just ran inside to get their kid from daycare. It doesn't know if the owner is at a doctor's appointment 40 miles from home. And more to the point, it's not as if these solved a problem. Cars were repossessed aplenty before they were invented, the only difference is it used to be expensive, so a bank would work with the borrower to attempt to salvage the loan or at the very least, have to repossess the vehicle when the borrower was at home or at work. Now it's cheap to repo the car, so why bother? Why even notify the person other than with a text message, the Lender now has no reason to even attempt it, just repo the car, get it back on the lot and sell it to the next poor bastard who's desperate for a car.

lotsofpulp 9y ago

What do you mean by artificially high price and interest? I'm not familiar with Canada's auto sales market, but unless some organization has a monopoly on selling cars and there is a monopoly of lenders, then there are usually a sufficient number of buyers and sellers in the auto market so that price discovery is happening in sufficient manner such that neither the buyer nor seller are at an advantage. Also, unless there is data, I don't believe a company would disable a car in a manner that would be unsafe for anyone, at the least since it's a massive liability for them and there's no reason to. If anything, the GPS/car disabling would allow for lower costs for buyers since there is less risk for the lender, which would benefit the buyers who are responsible.

djrogers 9y ago
You don't have to be familiar with Canada's auto sales market to see this - there are dealers like this all over the US, you just aren't aware of them because you haven't tried to buy a used car with a horrible credit score and no cash (good for you BTW). These "tote-the-note" lots proliferate in low-income urban areas, and often offer sub-standard cars at higher prices than the traditional used car market, and top it off with really high interest rates. Often they will sell and repo the same cars over and over, taking payments and down payments until the buyer hits a streak of bad luck or poor decision making. On one had, the fact that these dealers do repo cars so often sorta justifies the big interest rates - after all, why would you loan money at a higher risk without a higher return? The flip side is that this tends to be very bad for society as a whole, making it insanely more expensive to be poor.
- thomaskcr 9y ago
  I think you're making assumptions on intent/motivations. It's not like you can't bring your own financing to any car dealer, if you really can't secure a loan from anyone else - then for these used car lots the costs of being willing to deal with that market are rolled into the price of this car. They aren't just a lot, they are a high-default finance and repo operation also. They need to pay additional insurance, monitor their cars - their rates can't be great and every car requires some version of gap insurance on their end probably at least for a while if they're rolling these costs into the sale price and then requiring no or little down payment. I assume since they're smaller operations their money has a higher time-value to them -- i.e. if a higher than normal number of people pay late one month, they may be late on their debt payments since I assume they have some type of line of credit and they themselves probably don't have the best rate. I don't think they are specifically out to mess up people's lives is all I'm saying, it's easy to get caught up in the emotional side of a car repossession but think about if a client didn't pay you and you were racking up credit card interest waiting for them so you can pay your own bills -- would you feel bad about taking back your work after a certain period of time?
  - FireBeyond 9y ago
    > every car requires some version of gap insurance on their end probably at least for a while if they're rolling these costs into the sale price When you're selling a Kia with a KBB of $3,000 for $13,000, I'm going to assume you've adequately "factored in your costs" without resorting to gap insurance (which is going to be huge, because the insurer is going to pay fair market on KBB, not what you sold the car for) other than (further) extortion. > they may be late on their debt payments since I assume they have some type of line of credit and they themselves probably don't have the best rate. Hah. I had to use a subprime dealer after my divorce (not to the extent of GPS / immobilization, but 'pricy'). A year or so after buying the car, I got a call from a bank that I didn't recognize, saying that I owed them $2,000. This was the same amount that I'd written on a check for the down payment on the car. Sure, a cancelled check stub saying "Sorry, I paid the dealer the down payment" cleared it up, but something was awry. Six months later, their multiple locations are shut and another bank has them in court for breaches of contract that I think ended up as fraud proceedings against the dealership owners for multiple financing issues (mind you, they were both still driving their Bentleys)...
Jesus_Jones 9y ago
In poor areas, there are often fewer dealers, because you have to deal with poor people who have less access to money. It's often more profitable to sell expensive items. If you do serve a poor area, you are very likely to be able to force terms that are onerous. On the second issue, what if you drove that car out for a hike and its cold and started raining, and now you can't get inside it? What if you need to drive someone to the hospital? Of course, they can just die, because they are poor.
mikeash 9y ago
Most people have a low understanding of how financial products work. The lender, on the other hand, does this for a living. Most buyers are at a huge disadvantage.
FussyZeus 9y ago
> Also, unless there is data, I don't believe a company would disable a car in a manner that would be unsafe for anyone Looking past the fact that I already gave you one example, how would they know? The GPS device knows where the vehicle is, what it's running state is, and that's it. They don't know if the vehicle is stopped helping another person on the side of the highway. It doesn't know if the driver just ran inside to get their kid from daycare. It doesn't know if the owner is at a doctor's appointment 40 miles from home. And more to the point, it's not as if these solved a problem. Cars were repossessed aplenty before they were invented, the only difference is it used to be expensive, so a bank would work with the borrower to attempt to salvage the loan or at the very least, have to repossess the vehicle when the borrower was at home or at work. Now it's cheap to repo the car, so why bother? Why even notify the person other than with a text message, the Lender now has no reason to even attempt it, just repo the car, get it back on the lot and sell it to the next poor bastard who's desperate for a car.