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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 y

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)...
- djrogers 9y ago
  > I think you're making assumptions on intent/motivations. I’m not sure how you parsed that from my post - I didn’t ascribe any intent or motivation to any party.
logfromblammo 9y ago
They're easy enough to find using a good interactive map. First, search for "title loan", "payday loan", and "check loan" businesses. This anchors your search areas to places where predatory lending is profitable. Then search for "car dealership" and ignore any results that have a brand name or a large lot, as those are the new car dealers. You will find the used car dealers with smaller inventories. If you can get a street-level view of the lot, and see signage about "buy here pay here" or "no credit check", you have a winner. These types of businesses are literally everywhere, from downtown in a big city to the no-name dealer set up on the largest highway passing through a semi-rural town in the middle of nowhere. You can find them wherever poor people are to be found in North America, because having a mostly reliable personal vehicle is often the unavoidable first step to climbing out of abject, destitute, hopeless poverty into a more comfortable (but still bleak) working-class existence. It is not entirely clear to me whether anti-usury laws would help or hurt more. Clearly, these businesses are providing a vital service to the poor. But they are also providing it in such a way that their customers are more likely to remain poor. Put into a metaphor, imagine you have 10 flotation rings. That's all you can afford to keep in inventory, but you're going to make a business of reselling them. Now, you could check satellite maps, and go door-to-door, selling them one at a time to confirmed pool owners as a prophylactic safety device. But those people have no pressure to buy. You'll get a lower price. So instead, you can go to public aquatic recreation hot spots, with no lifeguards--that is, no one else around to compete with your service--and wait. When someone starts drowning, someone will call out to you, "Hey! You! We need that, right now!" And you will say, "Certainly. That will be $15000. Don't worry, it's payable with no money down and 120 easy monthly installments of $100, with a final balloon payment of $3000. Sign here." Faced with the choice between paying it and letting someone drown, they pay. If a buoyancy-hawker was not there, that swimmer would drown. But since you were there, you just put someone in debt-slavery to you for the next decade or so. Profit! And then when that 10 years is up, they still don't have that $3000 all at once, so you can stick them again on their way out. Profit again! Obviously, the best solution all around would be for the parks department to provide prepaid lifeguards for everyone at fair prices. But the people who can afford to pay for that would rather swim at their private club than at a nasty river bank with a bunch of poor people. "Why don't they just learn how to swim better?" they say. "If a $50 annual pool club membership is too much, maybe they shouldn't swim at all," they say. And so the situation persists.

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)...
djrogers 9y ago
> I think you're making assumptions on intent/motivations. I’m not sure how you parsed that from my post - I didn’t ascribe any intent or motivation to any party.

logfromblammo 9y ago

They're easy enough to find using a good interactive map. First, search for "title loan", "payday loan", and "check loan" businesses. This anchors your search areas to places where predatory lending is profitable. Then search for "car dealership" and ignore any results that have a brand name or a large lot, as those are the new car dealers. You will find the used car dealers with smaller inventories. If you can get a street-level view of the lot, and see signage about "buy here pay here" or "no credit check", you have a winner. These types of businesses are literally everywhere, from downtown in a big city to the no-name dealer set up on the largest highway passing through a semi-rural town in the middle of nowhere. You can find them wherever poor people are to be found in North America, because having a mostly reliable personal vehicle is often the unavoidable first step to climbing out of abject, destitute, hopeless poverty into a more comfortable (but still bleak) working-class existence. It is not entirely clear to me whether anti-usury laws would help or hurt more. Clearly, these businesses are providing a vital service to the poor. But they are also providing it in such a way that their customers are more likely to remain poor. Put into a metaphor, imagine you have 10 flotation rings. That's all you can afford to keep in inventory, but you're going to make a business of reselling them. Now, you could check satellite maps, and go door-to-door, selling them one at a time to confirmed pool owners as a prophylactic safety device. But those people have no pressure to buy. You'll get a lower price. So instead, you can go to public aquatic recreation hot spots, with no lifeguards--that is, no one else around to compete with your service--and wait. When someone starts drowning, someone will call out to you, "Hey! You! We need that, right now!" And you will say, "Certainly. That will be $15000. Don't worry, it's payable with no money down and 120 easy monthly installments of $100, with a final balloon payment of $3000. Sign here." Faced with the choice between paying it and letting someone drown, they pay. If a buoyancy-hawker was not there, that swimmer would drown. But since you were there, you just put someone in debt-slavery to you for the next decade or so. Profit! And then when that 10 years is up, they still don't have that $3000 all at once, so you can stick them again on their way out. Profit again! Obviously, the best solution all around would be for the parks department to provide prepaid lifeguards for everyone at fair prices. But the people who can afford to pay for that would rather swim at their private club than at a nasty river bank with a bunch of poor people. "Why don't they just learn how to swim better?" they say. "If a $50 annual pool club membership is too much, maybe they shouldn't swim at all," they say. And so the situation persists.