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

helsinkiandrew 3y ago
https://archive.ph/uCsl8 https://archive.ph/uCsl8
wolverine876 3y ago
They profited from selling mortgages that customers couldn't repay; they profit from selling student loans that can't realistically be repaid. Private equity leverages businesses with debt that can't be repaid. Wall Street used saddle governments (not the federal government, but state, local and foreign governments) with debt deals that they couldn't repay, and maybe they still do (they did as of the 2008 financial crisis). Business and the market are supposed to, ultimately, serve society, benefit real people somehow. Otherwise, what's the point? Sucking the life out of everyone else obviously isn't a workable plan for society.
helsinkiandrew 3y ago
> Customers failed to pay back one quarter of the money they borrowed, compared with the 42% default rate originally expected. It was a bonanza for Santander. I was going to say that Wall Street isn't the bogey man here and it's the car dealerships and the many Americans desire to own a flashy car they can't afford that is the problem, but making a product that you expect 42% to default on (with all the misery that that entails) is truly awful.
- BillyTheMage 3y ago
  An even deeper culprit is city planners, highway departments, the folks who write regulations related to such things. Everything is unwalkable. They've made us need cars, and then use that arbitrary need as an excuse to make even more things be car-centric.
  - helsinkiandrew 3y ago
    Agree that that's a problem, but the couple in the articles last car cost them $500, they just wanted something that was a little more reliable, but got sold a year old Ford F-150 truck with a €30,000 loan at 22% interest.
- happytiger 3y ago
  Jesus Christ that number is astounding. Those are Vegas loan shark numbers not auto loan default numbers.
- NovemberWhiskey 3y ago
  In all cases, you expected to take some losses when you extend credit - at what point does it become "awful" and not merely "business"?
  - helsinkiandrew 3y ago
    A few percent is the normal. The link below says the current 6.1% of car borrowers who are behind on payments is unprecedented. When a payer defaults they usually loose the item that is being financed, although they have paid far more than the value they've got out of it. Selling and expecting a 40% losses means your selling to people you know won't be able to afford the payments - and (in my opinion) should be treated as fraud. https://www.forbes.com/sites/antoniopequenoiv/2023/10/21/americans-are-overdue-with-their-car-payments-at-highest-rate-in-nearly-30-years/ https://www.forbes.com/sites/antoniopequenoiv/2023/10/21/ame...

https://archive.ph/uCsl8 https://archive.ph/uCsl8

They profited from selling mortgages that customers couldn't repay; they profit from selling student loans that can't realistically be repaid. Private equity leverages businesses with debt that can't be repaid. Wall Street used saddle governments (not the federal government, but state, local and foreign governments) with debt deals that they couldn't repay, and maybe they still do (they did as of the 2008 financial crisis). Business and the market are supposed to, ultimately, serve society, benefit real people somehow. Otherwise, what's the point? Sucking the life out of everyone else obviously isn't a workable plan for society.

helsinkiandrew 3y ago

> Customers failed to pay back one quarter of the money they borrowed, compared with the 42% default rate originally expected. It was a bonanza for Santander. I was going to say that Wall Street isn't the bogey man here and it's the car dealerships and the many Americans desire to own a flashy car they can't afford that is the problem, but making a product that you expect 42% to default on (with all the misery that that entails) is truly awful.

BillyTheMage 3y ago
An even deeper culprit is city planners, highway departments, the folks who write regulations related to such things. Everything is unwalkable. They've made us need cars, and then use that arbitrary need as an excuse to make even more things be car-centric.
- helsinkiandrew 3y ago
  Agree that that's a problem, but the couple in the articles last car cost them $500, they just wanted something that was a little more reliable, but got sold a year old Ford F-150 truck with a €30,000 loan at 22% interest.
happytiger 3y ago
Jesus Christ that number is astounding. Those are Vegas loan shark numbers not auto loan default numbers.
NovemberWhiskey 3y ago
In all cases, you expected to take some losses when you extend credit - at what point does it become "awful" and not merely "business"?
- helsinkiandrew 3y ago
  A few percent is the normal. The link below says the current 6.1% of car borrowers who are behind on payments is unprecedented. When a payer defaults they usually loose the item that is being financed, although they have paid far more than the value they've got out of it. Selling and expecting a 40% losses means your selling to people you know won't be able to afford the payments - and (in my opinion) should be treated as fraud. https://www.forbes.com/sites/antoniopequenoiv/2023/10/21/americans-are-overdue-with-their-car-payments-at-highest-rate-in-nearly-30-years/ https://www.forbes.com/sites/antoniopequenoiv/2023/10/21/ame...