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You understand that if i lend you $100 to buy a car, you pay off 50%, i can sell the car for $70, i would have to give you $20 (you only owe me $50). There are

by bko 4y ago

You understand that if i lend you $100 to buy a car, you pay off 50%, i can sell the car for $70, i would have to give you $20 (you only owe me $50). There are strict rules what you can do state by state, but generally you can't repossess something worth more than the outstanding balance and keep the rest as a profit For example here's NY state If you've already paid more than 60 percent of the amount you owe when the car is repossessed, the creditor must auction it within 90 days. During this time, you can still get your car back, says the New York City Bar Legal Referral Service. You have up until the car is actually sold or leased to settle with the lender. You might have to pay the past due amounts, but often you'll be asked to pay the entire loan balance. After the auction, the creditor can apply the proceeds toward fees and expenses relating to the repossession and the unpaid balance on the loan. The lender must give you a completed an Affirmation of Repossession and Bill of Sale. After all expenses are paid, you're entitled to the balance of the proceeds. https://www.sapling.com/6669128/new-state-car-repossession-laws https://www.sapling.com/6669128/new-state-car-repossession-l...

sangnoir 4y ago
>...if i lend you $100 to buy a car, you pay off 50%, i can sell the car for $70, i would have to give you $20 (you only owe me $50) The trick is to lend me $100 on a $40 dollar car that I cannot sell for $70. Nevermind the fact that in most states I can't sell the car for any amount as the dealership owns the lien. > There are strict rules what you can do state by state, but generally you can't repossess something worth more than the outstanding balance and keep the rest as a profit A lot of articles have been written about scammy "Buy Here, Pay Here" autosales that exist despite the strict rules. Since the dealership is financing the car, they can tweak the initial balance and monthly payments to their liking, while following the letter of the law but hitting the repo quota on the same '97 Honda Civic.
brigade 4y ago
An 84 month loan at New York’s maximum 16% interest means that the 60% threshold isn’t reached for 5 years, far after the expected loan lifetime. And the car isn’t the only thing being sold, there might be a bundled reconditioning fee, a GPS installation fee, a documentation fee, a service fee, origination fee, nitrogen fee, etc. So when they sell the car again for the same $2000 plus fees that you bought it for, they’ll happily deduct that $2000 from the $3000 you still owe. Since you mentioned subprime loans, to clarify: this is about the level below that, for people that can’t qualify for a loan from any real bank, even Santander.

by bko 4y ago

sangnoir 4y ago

>...if i lend you $100 to buy a car, you pay off 50%, i can sell the car for $70, i would have to give you $20 (you only owe me $50) The trick is to lend me $100 on a $40 dollar car that I cannot sell for $70. Nevermind the fact that in most states I can't sell the car for any amount as the dealership owns the lien. > There are strict rules what you can do state by state, but generally you can't repossess something worth more than the outstanding balance and keep the rest as a profit A lot of articles have been written about scammy "Buy Here, Pay Here" autosales that exist despite the strict rules. Since the dealership is financing the car, they can tweak the initial balance and monthly payments to their liking, while following the letter of the law but hitting the repo quota on the same '97 Honda Civic.

brigade 4y ago

An 84 month loan at New York’s maximum 16% interest means that the 60% threshold isn’t reached for 5 years, far after the expected loan lifetime. And the car isn’t the only thing being sold, there might be a bundled reconditioning fee, a GPS installation fee, a documentation fee, a service fee, origination fee, nitrogen fee, etc. So when they sell the car again for the same $2000 plus fees that you bought it for, they’ll happily deduct that $2000 from the $3000 you still owe. Since you mentioned subprime loans, to clarify: this is about the level below that, for people that can’t qualify for a loan from any real bank, even Santander.